Cash Conversion Cycle
Definition: The number of business days required to convert products to cash from sale, from the time the product is available for sale (i.e., in inventory) until the product is paid for and converted to cash. This number can be calculated by adding average days in inventory (DIO) and average days sales outstanding (DSO), then subtracting days payable outstanding (DPO) from that number.
Calculation: Days Sales Outstanding + Days Inventory Outstanding - Days Payable Outstanding
Leading Indicator: This KPI Definition measures a company's high-level results such as revenue.