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Ninety-one days from stock to cash
Use 80,000 of beginning inventory, 100,000 of ending inventory, and 360,000 of cost of goods sold. Receivables are 30,000 on 365,000 of credit sales. Payables are 30,000 on 365,000 of credit purchases. Keep 365 days.
Beginning inventory: 25% lower
Change beginning inventory to 60,000 while keeping the other example values the same.
Beginning inventory: 25% higher
Change beginning inventory to 100,000 while keeping the other example values the same.
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Quick answer
What does the Cash conversion cycle calculate?
How many days does cash stay tied up in inventory and receivables after payables? This calculator uses beginning inventory, ending inventory, cost of goods sold, accounts receivable, annual credit sales, accounts payable, annual credit purchases, and days in the period to estimate days cash stays in the operating cycle immediately in your browser.
With the values currently entered, the result is 91.3 days — cash conversion cycle. It also shows days of inventory, days sales outstanding, and days payable outstanding.
How to use the Cash conversion cycle
- Replace the example values with your own numbers.
- Review the result and supporting figures as they update automatically.
- Check the formula and assumptions before using the estimate for a decision.
Inputs used
- Beginning inventory
- Ending inventory
- Cost of goods sold
- Accounts receivable
- Annual credit sales
- Accounts payable
- Annual credit purchases
- Days in the period — entered in days
Cash conversion cycle formula
Inventory days = days ÷ (COGS ÷ average inventory). DSO = receivables ÷ credit sales × days. DPO = payables ÷ credit purchases × days. Cycle = inventory days + DSO − DPO.
Assumptions
- Inventory days invert the SEC inventory-turnover ratio. DSO and DPO follow the SBA glossary: Days Receivable and Days Payable use the receivable or payable balance, the matching annual credit flow, and 365 days unless you change the period.
- Keep inventory and cost of goods sold on the same cost basis. Credit sales belong with receivables. Credit purchases belong with payables.
Verify the inputs
Authoritative sources
These sources explain the definitions, factors, or rules behind this tool. Their geographic scope is shown because an official source for one country is not automatically valid somewhere else.
Defines current assets, current liabilities, working capital, Days Receivable, Days Payable, GPM%, and break-even analysis from fixed cost, variable cost, and profit.
Computation of ratiosUS Securities and Exchange CommissionScope: SEC-filed ratio definitions; method is generalWrites the current ratio as current assets divided by current liabilities, and inventory turnover as total cost of sales divided by average inventory (beginning plus ending, divided by two).
Sources do not endorse Calculum. Check the source date, scope, and your own documents before making a financial, tax, insurance, or reporting decision.
Practical guide
Cash conversion cycle example and edge cases
The cash conversion cycle is inventory days plus receivable days, minus payable days. SBA writes Days Receivable and Days Payable from the matching balance and the annual credit flow. Inventory days invert the SEC turnover ratio: days divided by cost of sales over average inventory.
Example: Ninety-one days from stock to cash
Use 80,000 of beginning inventory, 100,000 of ending inventory, and 360,000 of cost of goods sold. Receivables are 30,000 on 365,000 of credit sales. Payables are 30,000 on 365,000 of credit purchases. Keep 365 days.
- Beginning inventory
- 80,000
- Ending inventory
- 100,000
- Cost of goods sold
- 360,000
- Accounts receivable
- 30,000
- Annual credit sales
- 365,000
- Accounts payable
- 30,000
- Annual credit purchases
- 365,000
- Days in the period
- 365 days
Calculated result91.3 dayscash conversion cycle
Inventory sits 91.3 days. Customers take 30 days. You take 30 days with vendors. The cycle is 91.3 days. That is the time cash stays in the operating loop.
Example results use the default display profile. The calculator above follows your selected country and units.
How to read the result
- Read the cycle first. Then check the three legs. A shorter cycle usually means cash comes back sooner.
- A negative cycle means vendors fund the stock and the invoices. That can be useful, or it can mean you are stretching payables.
Edge cases worth checking
You buy for cash and sell on terms
Days payable then sit near zero. The cycle grows by the full inventory and receivable stretch. That is the cash gap this tool is meant to show.
Purchases and cost of goods sold are far apart
That is fine when stock is building or shrinking. Do not force them to match. Purchases belong with payables. Cost of goods sold belongs with inventory days.
What changes the result most
Beginning inventory
Use a current amount for beginning inventory. Include fees or recurring costs that belong in the same figure.
Ending inventory
Use a current amount for ending inventory. Include fees or recurring costs that belong in the same figure.
Cost of goods sold
Use a current amount for cost of goods sold. Include fees or recurring costs that belong in the same figure.
Try a different scenario
Small changes show whether the answer is stable or sensitive.
Beginning inventory: 25% lower
60,00081.1 dayscash conversion cycle
Beginning inventory: 25% higher
100,000101.4 dayscash conversion cycle
Ending inventory: 25% higher
125,000103.9 dayscash conversion cycle
Common mistakes
Check beginning inventory
Inventory days invert the SEC inventory-turnover ratio. DSO and DPO follow the SBA glossary: Days Receivable and Days Payable use the receivable or payable balance, the matching annual credit flow, and 365 days unless you change the period. Make sure this matches the number you enter.
Keep days in the period consistent
Keep inventory and cost of goods sold on the same cost basis. Credit sales belong with receivables. Credit purchases belong with payables. Use the same units and time period throughout the calculation.
Do not rely on one cash conversion cycle scenario
Run a cautious case and an optimistic case. The range is often more useful than one exact-looking number.
Use this result well
How many days does cash stay tied up in inventory and receivables after payables?
It does not replace a quote, contract, accountant, or local employment guidance.