Finance Lab
Working capital cycle
See how long your cash is tied up between paying suppliers and being paid by customers.
Debtor days = debtors ÷ revenue × 365. Stock days = stock ÷ cost of sales × 365. Creditor days = creditors ÷ cost of sales × 365. Cash cycle = debtor days + stock days − creditor days.
Step 1 · Enter your figures
Every box starts with an example figure. Replace each one with your own — the result updates as you type. Nothing you type is sent anywhere or stored.
Sales for the year, excluding GST.
Direct costs of delivering those sales.
Amounts customers owe you right now.
Inventory held at cost.
Amounts you owe suppliers right now.
Step 2 · Read the result
Debtor days
58 days
Average time customers take to pay you.
- Stock days
- 55 daysAverage time stock sits before it is sold.
- Creditor days
- 46 daysAverage time you take to pay suppliers.
- Cash cycle
- 68 daysCash is out of the business for this many days on every cycle.
- Cash tied up in the cycle
- $222,000Roughly what a cycle of this length costs you in working capital.
- Cash released by ten fewer debtor days
- $54,795
- Stock days55 days
- Creditor days46 days
- Cash cycle68 days
- Cash tied up in the cycle$222,000
- Cash released by ten fewer debtor days$54,795
What this answer rests on (8)
- Annual revenue$2,000,000
You entered this
Sales for the year, excluding GST.
- Annual cost of sales$1,200,000
You entered this
Direct costs of delivering those sales.
- Trade debtors$320,000
You entered this
Amounts customers owe you right now.
- Stock on hand$180,000
You entered this
Inventory held at cost.
- Trade creditors$150,000
You entered this
Amounts you owe suppliers right now.
- Balances at a single date are treated as representative of the year. A seasonal business should test its peak.
The calculator applied this
- Revenue and costs are stated excluding GST, so the day counts are comparable.
The calculator applied this
- Nothing here is compared with any industry figure — the comparison that matters is against your own prior periods.
The calculator applied this
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Save to my workspaceWhat this means for you
How many days your cash is locked up between paying for what you sell and being paid for it — and what that costs you.
How to read it
- The cash cycle is the number that matters. Positive means you fund the gap; negative means your suppliers do.
- The cash tied up figure is real money sitting in debtors and stock rather than in your account.
- The last line shows what ten days off your debtor days would release. That is usually the fastest cash win in a business.
Watch out for
- Using a quiet month's balances. Test your peak trading period, where the strain actually happens.
- Mixing GST-inclusive balances with GST-exclusive revenue, which inflates the day counts.
- Fixing the cycle by simply paying suppliers later. That buys days and costs relationships.
Assumptions behind this result
- Balances at a single date are treated as representative of the year. A seasonal business should test its peak.
- Revenue and costs are stated excluding GST, so the day counts are comparable.
- Nothing here is compared with any industry figure — the comparison that matters is against your own prior periods.
General information only. This calculator does not take your circumstances into account and is not financial, tax, legal or investment advice. Confirm every rate, threshold and figure with your own adviser before acting.
Related calculators
Other tools in cash and trading.
Take this further
Members run this calculator on their own recorded figures, save the workings to their workspace, export them to Word or Excel, and read the lessons that teach the thinking behind the result.