Working capital

What the figures mean

Days of inventory (DIO)

An estimate of how many days of activity the inventory represents. Inventory, cost of sales and period length must use comparable bases.

Simple example: A result of 30 days means about one month of inventory at the entered sales pace.

Days to collect customer payments (DSO)

An estimate of the days between sales and payment collection. Customer receivables and revenue must use comparable periods.

Simple example: A result of 45 days represents roughly a month and a half before customers’ money arrives.

Days to pay suppliers (DPO)

An estimate of days before supplier payment from payables relative to cost of sales. Use comparable figures from the same period.

Simple example: A result of 20 days represents approximately a twenty-day payment interval with the entered figures.