Term Definitions
DSODays Sales Outstanding
Average number of days to collect payment from customers after a sale. Lower is better — means faster cash collection.
DIODays Inventory Outstanding
Average number of days inventory is held before being sold. Lower means faster inventory turnover.
DPODays Payable Outstanding
Average number of days to pay suppliers. Higher is better — means you hold cash longer before paying.
CCCCash Conversion Cycle
DSO + DIO − DPO. Measures how many days cash is tied up in operations. Negative CCC means you collect before you pay — ideal.