Working Capital Cycle Template

Working Capital Cycle Template

This working capital cycle template shows you how to calculate the working capital cycle given the inventory days, receivable days, and payable days.

This is what the working capital cycle template looks like:

Working Capital Cycle Template Screenshot


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Working Capital Cycle Template

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The Working Capital Cycle for a business is the length of time it takes to convert net working capital (current assets less current liabilities) all into cash.  Businesses typically try to manage this cycle by selling inventory quickly, collecting revenue from customers quickly, and paying bills slowly, to optimize cash flow.


Steps in the Working Capital Cycle

For most companies, the working capital cycle works as follows:

  1. The company purchases materials to manufacture a product on credit  (for example, they have 90 days to pay for the raw materials).
  2. The company sells its inventory in 85 days – on average (days payable outstanding).
  3. The company receives payment from customers for the products sold in 20 days – on average.


Working Capital Cycle Formula

Working Capital Cycle = Inventory Days + Receivable Days − Payable Days


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