# How To Calculate Cash Conversion Cycle in Quickbooks Pro | Arithmix

Learn how to calculate your company's cash conversion cycle using Quickbooks Pro with our step-by-step guide. Improve your financial management and cash flow by understanding this important metric.

Calculating the cash conversion cycle is an important aspect of managing your business's cash flow. It helps you understand how long it takes for your business to convert its investments in inventory and other assets into cash. This information can be used to make better decisions about managing your working capital and improving your cash flow. In this article, we'll walk you through the steps to calculate the cash conversion cycle.

## What Is Cash Conversion Cycle?

The cash conversion cycle is a financial metric that measures the time it takes for a business to convert its investments in inventory and other assets into cash. It is calculated by adding the number of days it takes to sell inventory, the number of days it takes to collect accounts receivable, and subtracting the number of days it takes to pay accounts payable. The resulting number represents the number of days it takes for a business to convert its investments into cash.

The cash conversion cycle is an important metric for businesses because it provides insight into how efficiently they are managing their working capital. A shorter cash conversion cycle means that a business is able to generate cash more quickly, which can be used to invest in growth opportunities or pay down debt. A longer cash conversion cycle can indicate that a business is struggling to manage its working capital, which can lead to cash flow problems and financial instability.

## When Is It Valuable To Calculate Cash Conversion Cycle?

Calculating the cash conversion cycle is valuable for businesses of all sizes and industries. It can help you identify areas where you can improve your cash flow and manage your working capital more efficiently. For example, if you have a long cash conversion cycle, you may want to focus on improving your inventory management or negotiating better payment terms with your suppliers. Alternatively, if you have a short cash conversion cycle, you may want to consider investing in growth opportunities or paying down debt.

Calculating the cash conversion cycle can also be useful when evaluating potential investments or acquisitions. By understanding the cash conversion cycle of a target company, you can assess its ability to generate cash and manage its working capital. This information can help you make more informed investment decisions and avoid potential financial risks.

## How Do You Calculate Cash Conversion Cycle in Quickbooks Pro

Quickbooks Pro itself isn’t naturally geared towards letting you calculate complex metrics like Cash Conversion Cycle. As an alternative, teams typically use products like Arithmix to import data from Quickbooks Pro and build out dashboards.

## What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers that’s powerful yet easy to use. With Arithmix you can import data from systems like Quickbooks Pro, combine it with data from other systems, and create calculations like Cash Conversion Cycle.

In Arithmix, data is organized into Tables and referenced by name, not by cell location like a spreadsheet, simplifying calculation creation. Data and calculations can be shared with others and re-used like building blocks, vastly streamlining analysis, model building, and reporting in a highly scalable and easy to maintain platform. Data can be edited, categorized (by dimensions) and freely pivoted. Calculations are automatically copied across a dimension - eliminating copy and paste of formulas.