Liquidity & Supply Chain Finance Lab

Working Capital & Cash Conversion Cycle Simulator

Calculate Days Inventory (DIO), Days Sales (DSO), Days Payables (DPO), and Cash Conversion Cycle (CCC). Discover how much non-dilutive cash is trapped in operations and simulate cash-release levers.

CCC Model Cash-Release Matrix CCC Theory & Formulas FAQ

Industry Capital Presets

Load calibrated balance sheet working capital profiles.

Step 1: Balance Sheet & Income Statement Inputs

Working Capital Drivers

$
Total annual top-line sales.
$
Direct product inventory or service fulfillment costs.
$
Raw materials, WIP, and finished goods on hand.
$
Unpaid invoices owed by customers.
$
Unpaid invoices owed to suppliers.
%
Annual interest rate to finance trapped capital.
Cash Conversion Cycle
0.0 days
Days Inventory (DIO)
0.0 days
Days Sales (DSO)
0.0 days
Days Payables (DPO)
0.0 days
Net Working Capital
$0.00
Carrying Financing Cost
$0.00/yr

Step 2: Capital Release Strategy

Working Capital Optimization & Cash-Release Simulation

Simulates the exact non-dilutive liquidity unlocked by speeding inventory turns, tightening receivables, and extending supplier payment terms.

Efficiency Scenario Cash from DIO Cash from DSO Cash from DPO Total Cash Unlocked New CCC & Annual Savings

Corporate Finance Guide

Understanding the cash conversion cycle

The Cash Conversion Cycle (CCC) measures the duration between spending cash to create inventory and collecting cash from sales.

  • The Cash Gap: A positive CCC represents a cash shortfall that must be financed by borrowing or owner cash.
  • Negative Working Capital: When DPO exceeds DIO + DSO, suppliers finance operations for free, allowing hyper-growth without debt.
  • Hidden Growth Drag: Rapid sales growth in businesses with high CCC can trigger cash flow crises because accounts receivable and inventory grow faster than cash collections.

Test full cash runways in the 12-Month Pro-Forma Generator or analyze unit contribution in the Break-Even Matrix Lab.

Treasury Formulas

Working capital equations

Days Inventory Outstanding (DIO) = (Average Inventory ÷ COGS) × 365

Days Sales Outstanding (DSO) = (Accounts Receivable ÷ Total Revenue) × 365

Days Payables Outstanding (DPO) = (Accounts Payable ÷ COGS) × 365

Cash Conversion Cycle (CCC) = DIO + DSO − DPO

Net Working Capital (NWC) = (Inventory + Accounts Receivable) − Accounts Payable

Explore inventory and supply dynamics in the Grocery Store Simulator, Bookstore Simulator, or Bakery Simulator.

FAQ

Cash conversion cycle and working capital questions

What is the Cash Conversion Cycle (CCC)?

The Cash Conversion Cycle measures the number of days it takes for a business to convert inventory and operational investments into completed cash collections from customers. It is calculated as DIO + DSO - DPO.

What does a negative Cash Conversion Cycle mean?

A negative CCC means the company collects cash from customers before it has to pay its suppliers (e.g. Amazon, restaurants, grocery stores). This provides free interest-free supplier financing to fund growth.

How can a business reduce its Cash Conversion Cycle?

A company can shorten its CCC by increasing inventory turnover (lowering DIO), accelerating customer collections and reducing invoice terms (lowering DSO), or negotiating extended payment terms with suppliers (increasing DPO).

What is the financial carrying cost of working capital?

When cash is trapped in inventory and unpaid customer invoices, businesses must finance that capital via bank credit lines or owner equity, incurring interest or opportunity costs.

Can I export working capital data to CSV?

Yes. You can export the complete working capital diagnosis and optimization matrix to a UTF-8 CSV spreadsheet with formula injection defense or print an executive brief.

Are these calculations formal treasury or tax advice?

No. This tool provides simplified educational models to demonstrate working capital dynamics without factoring in bad debt write-offs, supplier early payment discounts, or letters of credit.

Continue Exploring Business Decision Tools

Explore our Retail & Inventory Simulation Games Hub, model customer acquisition in the Unit Economics & LTV Lab, analyze multi-product break-even in the Break-Even Matrix Lab, or build 12-month statements in the Financial Model Generator.