Where is your cash tied up?

What does this tool answer?

A profitable business can still run short of cash, because its money is tied up in inventory and with customers. The tool calculates how many days your money stays away from you before it comes back as cash, how many riyals are tied up now, and how much is freed if you collect faster or reduce inventory.

The formulas

• Inventory days = inventory ÷ cost of sales × 365.
• Days sales outstanding = accounts receivable ÷ sales × 365.
• Days payable to suppliers = accounts payable ÷ cost of sales × 365.
• Cash conversion cycle = inventory days + days sales outstanding − days payable: the days you finance from your own money.
• Tied-up cash = inventory + accounts receivable − accounts payable.
• Cash freed by faster collection = sales ÷ 365 × days, and by less inventory = cost of sales ÷ 365 × days.

Worked example

Annual sales of 1,200,000 SAR, cost of sales of 900,000 SAR, inventory of 150,000 SAR, customers of 200,000 SAR and suppliers of 100,000 SAR:

• Inventory days = 150,000 ÷ 900,000 × 365 = 60.8 days, days sales outstanding = 200,000 ÷ 1,200,000 × 365 = 60.8 days, and days payable = 100,000 ÷ 900,000 × 365 = 40.6 days.
• Cash conversion cycle = 60.8 + 60.8 − 40.6 = 81.1 days.
• Tied-up cash = 150,000 + 200,000 − 100,000 = 250,000 SAR.
• If you collect 10 days faster, 1,200,000 ÷ 365 × 10 = 32,876.71 SAR is freed, and each single day frees about 3,287.67 SAR.

Limits of the tool

Days are calculated on 365 days using annual figures, so if you enter sales for a period shorter than a year, the days appear larger than they really are. It is better to use the average inventory and balances during the year rather than the balance on a single day. This is an estimate based on the numbers you entered, not financial or investment advice.

Frequently asked questions

Content last reviewed: 2026-10-28