Cash conversion cycle, or net operating cycle, is the number of days it takes a business to convert its production inputs into cash receipts. The calculation is commonly used by analysts to measure the time between a company's initial investment in working capital and the company's cash collection. The cash conversion cycle equals the Days Sales Of Inventory (DSI), plus Days Sales Outstanding (DSO), minus Days Payable Outstanding (DPO). Cash Conversion Cycle (CCC) = Days Sales Of Inventory (DSI) + Days Sales Outstanding (DSO) - Days Payable Outstanding (DPO). Usually, a shorter cash conversion cycle means a company only needs to finance its accounts receivable and/or inventory for a short period of time. This can indicate higher liquidity and effective management of inventory and credit sales. A longer cash conversion cycle indicates a company takes longer to sell its product and/or receive payments from its customers, or possibly that it’s paying bills too quickly. Techno Computers, a high tech computer manufacturer, takes about 60 days to sell its inventory. It takes about 30 days to receive payments from its customers for the products sold, and it takes an average of 45 days to pay its suppliers. This means that Techno Computers has a Cash Conversion Cycle of 45 days (60+30-45). If Techno computers decides to prolong its payment to suppliers to 55 days instead of 30, Techno computers would have a cash conversion cycle of 35 days (60+30-55). The same changes can result from collecting receivables faster or converting inventory more rapidly.