This term apples to sales and production with regards to inventory straight through to receivables. Expressed in days, it means how long it takes a business to turn resource inputs (sales) into tangible cash flow. To calculate, the formula is CCC= DIO+DSO-DPO. DIP is the number of days inventory is outstanding. DSO is sales outstanding and DPO is payables outstanding. Of course, all businesses have a goal of keeping this number as low as possible.
