What Is the Cash Conversion Cycle (CCC)?

The cash conversion cycle measures how many days it takes a company to convert cash spent on inventory back into cash from sales.

A shorter CCC usually indicates better working-capital efficiency and lower liquidity pressure.

The formula

CCC = DIO + DSO - DPO, where DIO is Days Inventory Outstanding, DSO is Days Sales Outstanding, and DPO is Days Payable Outstanding.

How to improve it

• Convert inventory into sales faster.
• Collect customer payments sooner.
• Extend supplier payment terms responsibly.

Supply chain finance helps buyers extend payment terms while suppliers still receive early payment, allowing both sides to optimise working capital.