Cash Conversion Cycle CCC

The number of days cash is tied up in operations — from paying suppliers to collecting from customers.

Part of the Profitability & Quality course · Lesson 18 of 19

Formula

CCC = DIO + DSO - DPO

What it is

The cash conversion cycle (CCC) measures how long, in days, a company's cash is locked up in inventory and unpaid customer bills before it comes back in. It combines three pieces: days inventory is held, days customers take to pay, and days the company takes to pay its own suppliers. A shorter cycle means cash returns faster.

Why it matters

A short or negative CCC means the business funds its operations with supplier credit instead of its own cash, which frees up working capital and lowers financing needs. A rising CCC can signal slowing sales, bloated inventory, or customers paying late. It is a core measure of operating efficiency.

How it's calculated

Add days inventory outstanding (DIO) to days sales outstanding (DSO), then subtract days payable outstanding (DPO).

How Quintarthai uses it

Inventory, receivables, payables, revenue, and cost of goods sold needed to build the CCC are on the Financials tab of a company deep-analysis page.

Cross-border note. The calculation is currency-neutral because it is measured in days, so US and Canadian companies in the same industry can be compared directly without converting currencies.

FAQ

Is a negative cash conversion cycle good?

Often yes. A negative CCC means a company collects from customers before it pays suppliers, so suppliers effectively finance its operations. Retailers like large grocers and some online sellers run this way.

Does the CCC work for every company?

It is most useful for businesses that carry inventory and extend credit, such as retailers and manufacturers. For service firms and banks with little or no inventory it is less meaningful.

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