Working Capital Cycle Calculator
Calculate Debtor Days, Creditor Days, Inventory Days, and your overall Cash Conversion Cycle.
What this calculator does
Calculates the four core working capital metrics — Debtor Days, Creditor Days, Inventory Days, and the overall Cash Conversion Cycle — showing how long cash stays tied up in the operating cycle before it's collected back.
Who this is for
Business owners assessing how efficiently their cash cycles through operations, anyone preparing for a working capital loan application, or finance students practicing standard cash conversion metrics.
Methodology
Debtor Days (Days Sales Outstanding) = (Accounts Receivable ÷ Revenue) × 365. How long, on average, it takes to collect cash from customers after a sale.
Creditor Days (Days Payable Outstanding) = (Accounts Payable ÷ COGS) × 365. How long the business takes to pay its own suppliers.
Inventory Days (Days Inventory Outstanding) = (Average Inventory ÷ COGS) × 365. How long inventory sits before being sold.
Cash Conversion Cycle = Debtor Days + Inventory Days − Creditor Days. The total number of days cash is tied up in the operating cycle before it's collected back.
Worked example
$2,000,000 revenue, $250,000 accounts receivable, $1,200,000 COGS, $150,000 accounts payable, $200,000 average inventory: Debtor Days = (250,000 ÷ 2,000,000) × 365 = 45.6 days. Creditor Days = (150,000 ÷ 1,200,000) × 365 = 45.6 days. Inventory Days = (200,000 ÷ 1,200,000) × 365 = 60.8 days. Cash Conversion Cycle = 45.6 + 60.8 − 45.6 = 60.8 days — meaning cash is tied up in the operating cycle for roughly two months before it's recovered.
Interpretation
A shorter Cash Conversion Cycle means the business recovers its cash faster and needs less external financing to fund day-to-day operations. A longer cycle — slow-paying customers, slow-moving inventory, or fast-paying suppliers — means more cash is tied up at any given time, which is exactly what lenders look at when assessing how much working capital financing a business needs.
Your working capital cycle
Run the calculator above to see your Debtor Days, Creditor Days, and Inventory Days compared.
Common mistakes
- Using total sales instead of credit sales for Debtor Days. If a meaningful portion of sales are cash sales, using total revenue overstates how long collection actually takes.
- Ignoring seasonality. A single year-end snapshot can be misleading for seasonal businesses — consider using average balances across the year.
- Not comparing against industry norms. A 45-day cash conversion cycle might be excellent in one industry and poor in another.
- Missing opportunities to negotiate better terms. Extending Creditor Days (paying suppliers slightly slower) or shortening Debtor Days (collecting from customers faster) both directly shrink the Cash Conversion Cycle, freeing up cash without needing new financing.
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Frequently Asked Questions
How can a business shorten its Cash Conversion Cycle?
Two main levers: collect from customers faster (shorter Debtor Days, e.g. through early-payment discounts or stricter credit terms) and negotiate longer payment terms with suppliers (longer Creditor Days). Reducing excess inventory also shortens Inventory Days. All three directly reduce how long cash stays tied up.
What is a good Cash Conversion Cycle?
Lower is generally better — it means cash is tied up for less time. Some highly efficient retailers achieve a negative CCC, collecting cash from customers before paying their own suppliers.
What's the difference between Debtor Days and Creditor Days?
Debtor Days measures how long it takes to collect cash from customers. Creditor Days measures how long the business takes to pay its own suppliers — a longer Creditor Days period is generally favorable for cash flow.
Why does this matter to a lender?
A long working capital cycle means cash is tied up longer, increasing the business's need for short-term financing — lenders use these metrics to assess how much working capital funding a business genuinely needs.