Read Cash Timing Before the Bank Balance
Explain how DIO, DSO, and DPO combine into the cash conversion cycle.
Cash pressure usually starts as a timing gap, not as a mystery. Three clocks drive the cycle The cash conversion cycle combines inventory days, receivable days, and payable days. DIO shows how long cash sits in inventory or unfinished work. DSO shows how long sales stay in receivables. DPO shows how long supplier financing supports the business. The formula is a diagnosis, not a trophy DIO plus DSO minus DPO gives a time-based view of cash tied up in operations. A longer cycle means the company is financing more days of activity before cash comes back. That may be acceptable…
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