TREASURY-MANAGEMENT5 MIN READ
Cash Conversion Cycle: Before and After
Calculate how changes in DIO, DSO, and DPO affect the cash conversion cycle.
Explain why growth absorbed about $2M of cash by calculating the before and after cash conversion cycle. CCC = DIO + DSO - DPO The common trap is blaming the loudest team instead of calculating which operating clock actually changed. Calculate The Starting Cycle Starting CCC = 30 DIO + 42 DSO - 35 DPO = 37 days. The starting number says cash is tied up for 37 days between paying for operations and collecting from customers. Calculate The New Cycle New CCC = 42 DIO + 50 DSO - 30 DPO = 62 days. Inventory and receivables now keep…
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