Calculate days sales outstanding, days payable outstanding, and days inventory outstanding with cash conversion cycle visualization.
Enter a period's credit sales, cost of goods sold, and average accounts receivable, inventory, and accounts payable balances, and this tool returns days sales outstanding, days payable outstanding, and days inventory outstanding, plus a cash conversion cycle visualization showing how cash moves through the business. The ratio definitions trip most users up: DSO divides by sales, but DIO and DPO divide by cost of goods sold, so feeding revenue into all three inflates DIO and DPO. A second surprise is that a negative cash conversion cycle is good: it means customers pay before supplier invoices come due.
A concrete input and expected output from the current implementation.
Input
Accounts receivable $100,000; credit sales $1,000,000; inventory $150,000; COGS $600,000; accounts payable $120,000; period 365 days
Expected output
DSO 36.5 days, DIO 91.25 days, DPO 73 days, cash conversion cycle 54.75 days (about 55 days). The timeline shows cash committed for roughly 55 days: 91 days in inventory plus 37 days awaiting customer payment, offset by 73 days of supplier credit.
Each ratio divides its balance by its activity base and scales to 365 days: 100,000/1,000,000 x 365 = 36.5; 150,000/600,000 x 365 = 91.25; 120,000/600,000 x 365 = 73. The cycle is DIO + DSO - DPO: 91.25 + 36.5 - 73 = 54.75 days, the time cash is committed before customers pay.
Each ratio is a balance divided by an activity figure, scaled to the period: DSO = average accounts receivable / credit sales x days, DIO = average inventory / COGS x days, DPO = average accounts payable / COGS x days. The entered period (365-day year or 90-day quarter) is applied to all three, keeping results comparable even when balance and flow figures are mixed.
The cash conversion cycle is DIO + DSO - DPO: the days cash sits in inventory, plus the days it waits in unpaid invoices, minus the days suppliers finance the business. The visualization places the three components on a shared timeline so the gap between paying suppliers and collecting from customers is visible at a glance. A shorter cycle means less cash committed to operations.
No. A negative CCC means customers pay before supplier invoices are due, so cash flows in before it flows out. That usually reflects advance payments or strong bargaining power and is desirable, not a mistake. If the tool shows negative days, verify that payables genuinely exceed receivables plus inventory before accepting the result.
Averages are the standard approach because they smooth seasonal swings and describe the whole period. Period-end balances are easier to gather but capture only one day. Use the same choice for all three balances; mixing them computes the ratios on inconsistent bases and makes the cycle misleading.
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