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Hold the flows constant in a fictional comparison
| Changed component | Constant period flow | Implied balance reduction |
|---|---|---|
| Inventory days | COGS 300 per 365 days | 6×300/365 ≈ 4.9315 |
| Receivable days | Sales base 500 per 365 days | 6×500/365 ≈ 8.2192 |
Explain the different amounts
Both changes reduce the reported cycle by six days, but their denominators differ. Applying COGS to a receivable-days change would use the wrong flow in this model.
State what the balance inference assumes
The flows and other components are held fixed, and the days calculations use the stated balances and bases. Changes in sales, costs, purchases or accounting scope can alter the inferred amounts.
Separate an implied balance movement from realised cash
A ratio-based balance inference does not establish cash already received or available for investment. Reconcile the actual balance movements and cash-flow information before making that claim.