CCC Formula = DIO + DSO – DPO ... Each of these totals requires a separate calculation and you used the results of those calculations for the ...CashConversionCycleFormula:HowToCalculateItHome/Blog/CashConversionCycleFormula:HowToCalculateItThecashconversioncycle(CCC)isameasureofthelengthoftimeittakestoconvertinventoryinvestmentsintocash.Thoughitmaysoundcomplicated,it’sfairlyeasytocalculatethesecashconversionswithaformula.Smallbusinessownerscanuseavarietyoffinancialratiostogetagoodideaabouthowwelltheirbusinessisperforming.Chancesareyou’refamiliarwithcommonratiossuchasthedebttoequityratio,thequickratio,andthecurrentratio.However,theCCCmaynotbeoneyouarefamiliarwith.TheCCCissometimesreferredtoasthenetoperatingcycleorthecashcycle.Thisratioismoreimportantifyoupurchaseandmoveyourinventoryonaregularbasis.TheCCCgivesyoualotofinformationfromonecalculation–includingtheamountoftimeyourbusinesstoconvertitscurrentinventoryIntocash,howlongittakestocollectonyouraccountsreceivables,andhowquicklyyouneedtopayyourvendors.Ifyouuseaccountingsoftware,youcanpullthetotalsyouneedtocalculateyourCCCfromyourfinancialstatements.CashConversionCycleFormula:HowToCalculateItTocalculateyourCCC,youhavetofollowmultiplesteps.Beforeyoucandoit,youfirstneedtotalsforthefollowing:DaysofInventoryOutstanding(DIO)Dayssalesoutstanding(DSO)Dayspayablesoutstanding(DPO)CCCFormula=DIO+DSO–DPOEachofthesetotalsrequiresaseparatecalculationandyouusedtheresultsofthosecalculationsforthebassistofcalculatingtheCCC.Youalsoneedtohavethenumberofdaysinthe.Forwhichyou’recalculatingtheCCC.Forinstance,ifyou’recalculatingitforaquarter,youwouldneedtouse90daysandifyouarecalculatingitfortheentireyear,youwoulduse365days.Let’sconsiderKathy–whomanufacturesandsellspersonalizedgoods.ShedecidestocalculatetheCCCforherbusinessin2019.ThesearethestepsKathyneedstotake.Step1:CalculateDIOThefirstpartiscalculatingDIO.Kathyneedstocalculateherdaysofinventoryoutstanding–orDIO.Thisisusedtodeterminehowmanydaysittakestoturntheinventorytosales,withtheDIO