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CCC (Cash Conversion Cycle)

The Cash Conversion Cycle (CCC) measures the total number of days between when cash leaves the business to pay for inventory and when cash is received from sales. It combines inventory duration, supplier payment timing, and payout timing into a single measure of capital efficiency. Formula: CCC = DIO + DSO − DPO

Why It Matters

  • •CCC captures the full financial cycle — not just operational speed or margin.
  • •A shorter CCC reduces working capital requirements and increases growth capacity.
  • •A long or positive CCC indicates that cash is tied in the cycle for extended periods, often requiring external financing.
  • •CCC helps compare products, supplier arrangements, and sales channels through a single capital-based metric.

Connection to Capital

CCC tells you how quickly capital returns and how much working capital the business must continually allocate. It is the backbone metric for capital-efficient growth.

Related Terms

DIO (Days Inventory Outstanding) DPO (Days Payable Outstanding) DSO (Days Sales Outstanding) Working Capital

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