Read the formula and its variables
State the component conventions and use a consistent reporting period.
| Input | Meaning |
|---|---|
| DIO | Inventory days |
| DSO | Receivable days |
| DPO | Payable days |
Inspect a stated example
Components 48.6667, 43.8 and 30.4167 give approximately 62.05 days.
The illustrative inputs are not an actual issuer’s data. Match balance coverage, flow period and units before applying the formula.
Keep the conclusion within the evidence
The result is a days measure, not an amount of cash automatically available. Investigate changes by component.
A ratio change can motivate a further question. It does not automatically identify the transaction, risk or operational outcome that produced it.