⏳ Cash Conversion Cycle Calculator
Profit says whether you earned the money. This says when you get it — how many days your cash is tied up, how much that locks away, and how much more growth will need before it pays for itself.
⏳ Find Your Cash Cycle
Why timing, not profit, runs out first
Every other number a small business watches — margin, break-even, profit — assumes the money arrives when it is earned. It does not. You pay for stock, the stock sits, you sell it on credit, and the customer pays weeks later. For all of that time the sale is funded out of your own cash, and the more you sell, the more cash it takes.
This calculator turns those delays into a figure: the cash tied up in the cycle today, what a growth plan will add to it, and what a day of faster collection or longer supplier credit is worth. It is the arithmetic behind the familiar warning that a business can grow itself out of cash.
❓ Frequently Asked Questions
What is the cash conversion cycle?
It is the number of days between paying for what you sell and being paid for it: days customers take to pay (DSO), plus days stock sits before it sells (DIO), minus days you take to pay suppliers (DPO). A 75-day cycle means every sale is funded out of your own cash for 75 days before the customer's money arrives.
Why can a profitable business run out of cash when it grows?
Because the cash tied up in the cycle grows with sales. A business with 1,200,000 of revenue, 720,000 cost of sales, and a 75-day cycle has about 207,123 tied up in receivables and stock, net of what it owes suppliers. Grow sales 25% at the same payment days and it needs about 51,781 more — before the extra profit has arrived. If that cash isn't there, the business stalls while its profit-and-loss account looks healthy.
Why are receivables measured against revenue but inventory against cost of sales?
Because that is what each balance is carried at. Receivables are what customers owe at selling prices; inventory and payables are carried at cost. Measuring all three against revenue understates stock days and supplier days for any business with a margin, which is the most common mistake in a hand-worked cycle.
What is a day of faster collection worth?
One day of revenue. At 1,200,000 a year that is about 3,288 freed for every day customers pay sooner, permanently, for as long as sales hold. Chasing invoices from 45 to 35 days frees roughly ten times that.
What does a negative cycle mean?
Your customers pay you before you pay your suppliers — common for subscription businesses and retailers who sell stock before the invoice is due. Then growth brings cash in rather than using it up. It lasts only as long as those terms do, so a supplier shortening your terms can turn a cash-rich business cash-hungry overnight.
Are these figures exact?
They are general informational estimates on a 365-day year, not professional tax, accounting, or financial advice. Seasonal businesses should use average balances rather than a single year-end figure. Consult a CPA or financial advisor for your real numbers.