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State the simplified inventory model
With no write-downs, returns, currency movements or other adjustments, closing inventory equals opening inventory plus purchases less COGS. Rearranging gives purchases = 300 + 70 − 10 = 360.
Calculate both labelled versions
| Flow basis | Payable days |
|---|---|
| Purchases 360 | 30.4167 |
| COGS 300 as a proxy | 36.5 |
Explain the convention difference
The balances are the same, but the denominator changes. Using the proxy adds about 6.0833 days to the payable estimate here and lowers the reported cash cycle by that same amount.
Check real-report adjustments
An actual inventory reconciliation can include other movements, and trade payables may relate specifically to credit purchases. Use the available scope and label a proxy instead of presenting it as the only definition.