> For the complete documentation index, see [llms.txt](https://docs.drivepoint.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.drivepoint.io/using-the-web-app/reports/monthly-review/cash-conversion-cycle.md).

# Cash Conversion Cycle

## Formula

The cash conversion cycle (CCC) is a metric that measures the number of days a company takes to convert the stock and inventory investments they’ve made into revenue from sales. The point is to measure the time between your investment (in inventory) and your return on that investment (through sales). This measurement can give you a sense of the health of your business and help you measure risk.

If the cash conversion cycle is shortening, this is a good sign as your business is leaving less and less cash tied up somewhere as you grow. It is a negative sign if the cash conversion cycle of your company is increasing or getting slower because it means more of your cash is being tied up for longer.

#### CCC = Days Inventory Outstanding (DIO) + Days Sales Outstanding (DSO) - Days Payable Outstanding (DPO) <a href="#ccc--days-inventory-outstanding-dio--days-sales-outstanding-dso---days-payable-outstanding-dpo" id="ccc--days-inventory-outstanding-dio--days-sales-outstanding-dso---days-payable-outstanding-dpo"></a>

DIO = (Total Inventory: Finished Goods / Cost of Goods Sold) \* Number of Days

DSO = (Accounts Receivable / Net Revenue) \* Number of Days

DPO = (Accounts Payable / Cost of Goods Sold) \* Number of Days


---

# Agent Instructions
This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com.

## Querying This Documentation
If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question.

Perform an HTTP GET request on the current page URL with the `ask` query parameter:

```
GET https://docs.drivepoint.io/using-the-web-app/reports/monthly-review/cash-conversion-cycle.md?ask=<question>
```

The question should be specific, self-contained, and written in natural language.
The response will contain a direct answer to the question and relevant excerpts and sources from the documentation.

Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.