Overview of CCC: Cash Conversion Cycle for Finance Pro

Introduction to overview of CCC: cash conversion cycle on an orange background with an illustration.

The CCC is a crucial business indicator that demonstrates a company’s efficiency. Furthermore, your company may monitor it to see how quickly it turns cash from sales into cash again. Also, it helps you see your current cash flow clearly.

What is CCC?

Definition: Days to convert inventory into cash flows from sales.


The cash conversion cycle expresses the amount of time your company needs to convert the investments in inventory to cash flow from sales.

Additionally, the CCC is known as the net operating cycle. In other words, the CCC aims to calculate the length of time that each net input dollar spends in the manufacturing and sales cycle before it is turned into cash received.

How to Calculate CCC?



  • DIO=Days of inventory outstanding
  • DSO=Days sales outstanding
  • DPO=Days payables outstanding

Days Inventory Outstanding (DIO) measures how long it takes your business to convert its inventory into sales. To clarify, DIO is the number of days on average that your company keeps its inventory in stock before selling it.

Days Sales Outstanding (DSO) metric measures the average time it takes a business to collect its receivables. In other words, DSO calculates the time it takes a business to collect payment following a purchase.

Days Payable Outstanding (DPO) determines how long it usually takes a business to settle its payables. Therefore, DPO evaluates the average time it takes for a business to pay its trade creditors, or suppliers, for their bills.

Advantages of CCC

#1: Traces The Cash Lifecycle for A Business Activity

It displays your company’s overall cash flow. Therefore, the quicker you convert your cash, the better your cash flow will be.

#2: Directly Improves DIO, DSO or DPO

Having a positive Cash Conversion Cycle can speed up the average days in inventory, reduce the average days of receivable and extend your average days of payable.

The Bottom Line

To conclude, if your company has a lower CCC, it indicates that your company has a stable working capital, liquidity, cash flow, and profitability.

If you want to learn more and broaden your finance knowledge, you can take my course.

Share This :

Further Readings:

Free Finance & Productivity Resources:

Free Finance & Productivity Resources

Reach Me

I help Finance professionals grow their skills in Finance, Controlling and FP&A.

If you need help, mentorship and guidance with your career, LET’S CONNECT.

Instant Download

Enter Your Email Address Below to Start Your Download.

You will be subscribed to my newsletter. Unsubscribe at any time.

Unlock Excel Secrets

Enter Your Email Address Below to Start Your Download.

You will be subscribed to my newsletter. Unsubscribe at any time.

Free Download

Get My Ultimate Resource for Finance Professionals.

Grab the Top 10 Free Finance Resources packed in a ZIP file and enhance your expertise and productivity.

Unlock Excel Secrets

Enhance Your Finance Skills with Excel Tips.

Before you leave, grab my top 100 Excel tips designed specifically for finance professionals.

Boost your efficiency and accuracy!


Fill out the form below, and we will be in touch shortly.