💸Cash Flow Formulas
Cash Conversion Cycle
Days Inventory Outstanding + Days Sales Outstanding - Days Payables Outstanding = Cash Conversion Cycle
What It Means
How long your cash is tied up in operations. Shorter = better cash flow.
✓Lower number means faster cash turnover
Example
Days Inventory Outstanding:45 days
Days Sales Outstanding:30 days
Days Payables Outstanding:40 days
45 + 30 - 40
Cash Conversion Cycle = 35 days
→ Cash is tied up for 35 days on average
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