Result
Cash gap amount
—
Your inputs are stored in this browser, so everything is still here next time. Nothing is sent to a server.
This calculation is for informational purposes only and does not replace advice from a qualified professional. Formulas and rates may not fit your exact situation — double-check the figures before making decisions.
How it is calculated
Cash gap amount = cash conversion cycle in days × annual COGS ÷ 365. The logic is simple: the cash conversion cycle shows how many days, on average, a company's money is tied up between paying suppliers and collecting from customers, and multiplying by daily COGS converts those days into a concrete amount.
This isn't a one-time cash shortfall in a specific month (that needs a month-by-month plan — see the monthly cash flow calculator), but a structural funding need for the operating cycle: even a profitable, growing company can run short of cash purely because its conversion cycle is positive.
The longer the cash conversion cycle, the more equity or borrowed funds are needed to keep operations running smoothly. The gap can be narrowed by speeding up receivables and inventory turnover or by negotiating longer payment terms with suppliers.