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Cash Conversion Cycle Calculator

6 Steps to Releasing Trapped Working Capital

Digital Negotiable Instruments (DNIs) can be a smart choice for the modern Treasurer as a safe and efficient way of unlocking working capital. They don’t introduce unwelcome risk or limit you to just one bank or source of funding.
Use our calculator to find out how to accelerate your working capital.

This calculator provides a useful general indication of the benefits achievable through use of Digital Negotiable Instruments.

No data is retained and the results remain confidential to you.

Step 1
  • Step 1
  • Step 2
  • Step 3
  • Step 4
  • Step 5
  • Step 6

Enter these figures from your financial report. No need to specify currency.

Click here to see your cash conversion cycle numbers:

Here is your current Cash Conversion Cycle based on the figures entered in Step 1.

(Inventory/Cost Of Goods Sold X 365)
(Trade Receivables/Gross Sales X 365)
(Trade Payables/Cost Of Goods Sold X 365)

(DIO+DSO-DPO)
See your results so far

Now you have your CCC you can enter a revised days payable outstanding using DNIs. Click 'Next Step':

(Trade Payables/Cost of Goods Sold X 365)
%
(DPO + % Increase)

(DIO+DSO-New DPO)
See your results so far

Now you have a revised CCC. Click 'Next Step' to see the impact on your liquidity requirement.

We can now calculate how the DNI has reduced the liquidity requirement for your business.

(Gross Sales/365 X Current CCC)
(Gross Sales/365 X New CCC)

(Current Liquidity Requirement -
New Liquidity Requirement)
See your results so far

On the next step, you can enter your WACC to see the true cost saving of your newly reduced liquidity requirement.

If you are able to provide your Weighted Average Cost of Capital we can determine the cost saving realised by reducing the liquidity requirement.

%

(Liquidity Benefit X WACC)
See your results so far

Finally, the resulting change in Trade Payables to your balance sheet.

(Cost Of Goods Sold X New DPO / 365)

See how you compare against your industry sector:

Compare
See your results

Download your new working capital position.

Please contact the team to find out more about TradeSecure:

Save your new working capital position as a PDF:

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Enter your liquidity data to see your cash conversion cycle numbers here

Current Cash Conversion Cycle

New Cash Conversion Cycle Score

Liquidity Tie-Up

Liquidity Benefit

Liquidity Benefit Cost Saving

Trade Payables Status
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6 Steps to Releasing Trapped Working Capital

6 Steps to Releasing Trapped Working Capital

STEP 1

Enter these figures from your financial report. No need to specify currency.

Gross Sales

1,285,398,667

Cost of Goods Sold

405,725,000

Inventory

203,295,000

Trade Receivables

190,570,000

Trade Payables

117,460,000

For more information, contact us at: contactus@tradesecure.uk

6 Steps to Releasing Trapped Working Capital

STEP 2

Here is your current Cash Conversion Cycle based on the figures entered in Step 1.

Days Inventory Outstanding (DIO)
(Inventory/Cost of Goods Sold x 365)

57.7

Days Sales Outstanding (DSO)
(Trade Receivables/Gross Sales x 365)

54.1

Days Payable Outstanding (DPO)
(Trade Payables/Cost of Goods Sold x 365)

33.4

Current Cash Conversion Cycle
(DIO+DSO-DPO)

78.5

For more information, contact us at: contactus@tradesecure.uk

6 Steps to Releasing Trapped Working Capital

STEP 3
Your Current DPO Is
(Trade Payables/Cost of Goods Sold x 365)

33.4

By What Percentage Would You Like To Extend Payment Terms Using A DNI?

5.00

%
New Days Payable Outstanding
(DPO/% Increase)

35.1

This results in a new cash conversion cycle score
(DIO+DSO-New DPO)

 

For more information, contact us at: contactus@tradesecure.uk

6 Steps to Releasing Trapped Working Capital

STEP 4

We can now calculate how the DNI has reduced the liquidity requirement for your business.

Current liquidity Requirement
(Gross Sales/365 x Existing CCC)

276,405,000

New liquidity Requirement
(Gross Sales/365 x Existing CCC)

122,698,706

Liquidity Benefit
(Current Liquidity Requirement - New Liquidity Requirement)

156,706,294

For more information, contact us at: contactus@tradesecure.uk

For more information, contact us at: contactus@tradesecure.uk

6 Steps to Releasing Trapped Working Capital

6 Steps to Releasing Trapped Working Capital

STEP 5

If you are able to provide your Weighted Average Cost of Capital we can determine the cost saving realised by reducing the liquidity requirement.

WACC

7.00

%
Liquidity Benefit Cost Saving
(Liquidity Benefit x WACC)

10,759,441

For more information, contact us at: contactus@tradesecure.uk

6 Steps to Releasing Trapped Working Capital

STEP 6

Finally, the resulting change in Trade Payables to your balance sheet.

Existing Trade Payables

117,460,000

New Trade Payables
(Cost of Goods Sold X New DPO / 365)

217,166,294

For more information, contact us at: contactus@tradesecure.uk

6 Steps to Releasing Trapped Working Capital

YOUR CASH CONVERSION CYCLE NUMBERS

Current Cash Conversion Cycle

78.5

New Cash Conversion Cycle Score

35.1

Liquidity Tie-Up

Liquidity Benefit

156,706,294

Liquidity Benefit Cost Saving

10,759,441

Trade Payables Status

For more information, contact us at: contactus@tradesecure.uk

For more information, contact us at: contactus@tradesecure.uk