Working Capital Calculator: DSO, DIO, DPO and Cash Cycle

Working capital, DSO, DPO and cash conversion cycle formulas

DSO is receivables ÷ annual revenue including VAT × 365. DPO relates trade payables to purchases including VAT, and operating working capital equals receivables + inventory − payables. The cash conversion cycle (DSO + DIO − DPO) is the number of days the business has to finance itself.

The tool's formulas

• DSO (customer days) = receivables incl. VAT ÷ (annual revenue incl. VAT ÷ 365).
• DPO (supplier days) = trade payables incl. VAT ÷ (annual purchases incl. VAT ÷ 365).
• DIO (inventory days) = average inventory ÷ (annual purchases incl. VAT ÷ 365).
• Working capital = receivables + inventory − payables, also shown in days of revenue.
• Cash conversion cycle = DSO + DIO − DPO, each rounded to the day.
• Cash released = daily revenue incl. VAT × days of DSO saved.

Example with the default values

Revenue of €1,200,000 incl. VAT (€3,288 a day), purchases of €600,000, €180,000 of receivables, €90,000 of payables and €100,000 of inventory. DSO = 54.75, rounded to 55 days; DPO = 55 days; DIO = 60.8, rounded to 61 days. Working capital is €190,000, i.e. 58 days of revenue, and the cycle is 55 + 61 − 55 = 61 days. Cutting DSO by 15 days releases €49,315 of cash; DSO falls to 45 days and the cycle to 51.

Limits

• Only receivables, inventory and trade payables are included: tax and social liabilities, VAT due or customer deposits are left out.
• DIO is based on purchases including VAT. If your inventory is valued excluding VAT, the figure is understated by about one sixth at a 20% VAT rate; cost of sales excluding VAT is a better base.
• Year-end balances can be seasonal; an average over several months gives more representative figures.

French legal benchmark: between businesses, agreed payment terms may not exceed 60 days from the invoice date, or 45 days end of month if the contract says so; without agreement the term is 30 days after delivery or service. A DSO persistently above 60 days therefore often points to late payment. The result is an estimate and does not replace an accountant's analysis.

Sources and dates: French Commercial Code, article L441-10, as presented on the official Entreprendre Service-Public page on payment terms between businesses, reviewed by the administration on 7 August 2026; some sectors (transport, food…) have their own caps (checked 14/10/2026).

Frequently Asked Questions

How do you calculate a company's DSO?

Divide receivables including VAT by annual revenue including VAT, then multiply by 365. With €180,000 of receivables for €1.2m of revenue, DSO is 54.75 days, rounded to 55. Use both figures including VAT, since customer invoices include it.

What is the maximum payment term between businesses in France?

Article L441-10 of the French Commercial Code sets 60 days from the invoice date, or 45 days end of month if the contract provides for it. Without agreement, the term is 30 days after delivery or service. Some sectors, such as transport or food, have their own caps.

What does a negative cash conversion cycle mean?

It means the business collects from customers before paying suppliers: DSO + DIO is lower than DPO. Large retailers are the typical case, paid in cash and paying suppliers on credit. Working capital is then negative and funds the business.

How much cash does a lower DSO release?

Each day of DSO saved releases one day of revenue including VAT. For €1.2m of revenue that is €3,288 a day, so €49,315 for 15 days. The tool applies this without counting the cost of collection efforts or factoring.

Is this tool really free?

Yes, all tools on Kristools are 100% free and accessible without registration.

Is my data protected?

Yes. All processing is performed directly and securely inside your browser. No personal data is sent to our servers.