Course · Act III: Reading the Numbers · Chapter 16
The cash conversion cycle
Asset turnover, days sales outstanding, days inventory outstanding and days payable outstanding, and the cash conversion cycle that combines them.
Key terms
- Asset turnover
- Revenue ÷ total assets.
- DSO / DIO / DPO
- Days to collect from customers / days stock sits / days to pay suppliers.
- Cash conversion cycle
- DIO + DSO − DPO. Days cash is tied up in operations; negative means suppliers fund you.
“Efficiency & the Cash Cycle” is part of the full course: 5 puzzles on the cash conversion cycle, with a story that carries through all five acts. Try this act’s free chapter, “Margins”, first.