Cash conversion cycle (CCC) = DSO + DIO − DPO. It counts the days cash sits trapped between paying suppliers and collecting from customers. Every day of CCC ties up one day of revenue in working capital.
Free cash flow = CFO − capex. Unlevered FCF (before interest) drives valuation. Levered FCF (after debt service) is what's left for owners.
The 13-week cash flow forecast is the operator's main tool. It's built on actual receipts and disbursements, and it rolls every week. Lenders demand one the moment a credit gets uncomfortable. Every business under $100M should run one before a lender asks.
Growth consumes cash. When demand is strong and the cash cycle is long, a healthy company can run short of cash.
Where the numbers come from
Simplification: this model sizes every day of the cycle at revenue per day. Strictly, inventory and payables days are worth cost of goods sold per day, which is smaller. The glossary has both versions.
What is one fix worth in your business?
The model above shows the cycle. This one puts a dollar value on moving it: one point of margin, five fewer days of receivables, and one more inventory turn. It's the same calculator as on the home page. Nothing leaves this page unless you ask for your breakdown.
One point of gross margin
$500,000
a year, every year
Five fewer days of DSO
$684,932
of cash released once
One more inventory turn
$1,762,500
of cash released once
Added gross profit each year
$500,000
Cash released once
$2,447,432
Cash tied up in receivables and inventory today
$15,935,788
The two cash fixes release 15.4% of the working capital tied up today.
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