THE PLAYGROUND
The cash tied up in growth
A shorter cycle releases financing capacity.
LIVE EXPERIMENT
The cash tied up in growth
Cash conversion cycle75 days
Before you move a sliderWhy can collecting ten days sooner release cash without creating new revenue?
Cash conversion cycle = 45 + 60 − 30 = 75 days
READ THE MECHANISM
Receivables and inventory tie up cash; payables finance part of that investment. Lower DSO can release cash without changing recognized sales. Extending DPO may damage supplier relationships and is not a limitless source of funding.
Model assumptions & units
Hypothetical $000, 365-day year, steady activity. Purchases are approximated by COGS for DPO. NWC here is receivables + inventory − payables; cash and debt are excluded. Seasonality and growth require more detailed schedules.