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State all period and balance inputs
| Input | Amount |
|---|---|
| Average inventory | 40 |
| COGS | 300 |
| Average receivables | 60 |
| Sales base | 500 |
| Average payables | 30 |
| Purchases base | 360 |
| Period length | 365 days |
Calculate each component
Inventory days are 48.6667, receivable days 43.8 and payable days 30.4167. Each calculation pairs its own balance with its declared flow.
Combine the clocks
Add inventory and receivable days for the operating cycle, then subtract payable days for the cash conversion cycle. Preserve unrounded components when calculating the total.
Do not treat the total as a cash amount
The cycle is a days statistic under these conventions. A dollar impact depends on which balance changes and on its corresponding flow rate.