MihsabaHow to use
Calculate operating and cash conversion cycles from your inventory, receivable and payable days, including negative cash cycles.
- Enter matching-period inputs with consistent units: Inventory days DIO, Receivable collection days DSO, Supplier payable days DPO
- Operating cycle = inventory days + receivable days; cash cycle = operating cycle − payable days
- Calculate, then check data definitions and assumptions in the note before comparing with another period.
How it is calculated
Example
Inventory of 45 days, collection of 30 and payment of 40 give an operating cycle of 75 and a cash cycle of 35 days. With payment at 90 days and other inputs unchanged, the cash cycle is −15 days.
Important notes
Inputs are estimated day ratios, not individual invoice dates. Derive them using consistent periods and averages: inventory days typically relate to cost of sales, receivable days to credit sales and payable days to credit purchases under your definition. The calculator does not derive these inputs from statements or convert the result into a financing amount. A negative cycle means average collection precedes average payment in the model, not absence of liquidity risk.
Worked examples and interpreting results
Inventory of 45 days, collection of 30 and payment of 40 give an operating cycle of 75 and a cash cycle of 35 days. With payment at 90 days and other inputs unchanged, the cash cycle is −15 days.
| Case | Calculation | Result |
|---|---|---|
| Operating cycle | 45 + 30 | 75 days |
| Cash cycle | 75 − 40 | 35 days |
How to check the result
Inputs are estimated day ratios, not individual invoice dates. Derive them using consistent periods and averages: inventory days typically relate to cost of sales, receivable days to credit sales and payable days to credit purchases under your definition. The calculator does not derive these inputs from statements or convert the result into a financing amount. A negative cycle means average collection precedes average payment in the model, not absence of liquidity risk.
Frequently asked questions
Can the cash cycle be negative?
Yes, when payable days exceed inventory plus receivable days. The negative sign should not be clamped to zero.
Does the operating cycle include supplier payment?
Under this definition the operating cycle adds inventory and collection only; the cash cycle then subtracts supplier payment days.
Are the starting inputs my actual data?
They are only the worked example. Replace them with your data and press Calculate. Editing an input clears the old result.