Breakdown
How it works
DSO measures how long customers take to pay, DIO how long stock sits, DPO how long you take to pay suppliers. CCC = DSO + DIO − DPO is the number of days cash is locked in operations. Reducing it funds growth without borrowing.
Formula
Worked example
12m revenue, 8m COGS, 1.8m AR, 1.5m inventory, 0.9m AP: DSO 55, DIO 68, DPO 41 → CCC 82 days; 2.4m tied up; each day cut releases ~33k.
Frequently asked questions
What is a good CCC?
Retail and FMCG: under 30 days (negative for supermarkets). Manufacturing: 60–90. Construction and contracting in the GCC: often 120+ because of slow receivables.
How do I shorten it?
Invoice faster and enforce terms (DSO), cut slow-moving stock (DIO), negotiate supplier terms without damaging relationships (DPO), or use supply-chain finance.
Should I use average or closing balances?
Averages of opening and closing balances are more accurate; closing balances are fine for trend tracking.