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How to calculate Cash conversion cycle

The Cash conversion cycle formula, with plain worked examples you can check yourself.

Cash conversion cycle = DIO + DSO − DPO

Worked examples

DIO = 60 · DSO = 50 · DPO = 20Cash conversion cycle = 90
DIO = 50 · DSO = 20 · DPO = 30Cash conversion cycle = 40
DIO = 30 · DSO = 50 · DPO = 20Cash conversion cycle = 60

How to use it

  1. Write down the values for each letter in the formula.
  2. Do the brackets first, then divide or multiply.
  3. Check the units before you compare results.
  4. Compare the answer with last period or with a competitor to see if it is good or bad.

This formula belongs to Cash & Liquidity.

Related terms

Cash flowLiquidityWorking capitalOverdraft

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