Three Ratios With Every Input and No Output
Stock valuation, receivables ageing, payables ageing and a payments register all exist and all work. The three ratios that turn them into a cash conversion cycle do not, and the gap file sizes that work in days.
The position, stated first
Every input to a cash conversion cycle is in this product and correct. None of the three ratios is computed, so the calculation is an export and a spreadsheet. It is one of the smallest open items we have and one of the largest omissions on a management pack, and that contrast is worth being honest about rather than explaining away.
A business does not usually fail because its margin is wrong. It fails because the money goes out in March and comes back in June, and nobody was counting the days in between.
The three numbers
What each one answers
Ratio The question
Days sales outstanding How long until we are paid
Receivables against sales. The number that tells you whether your credit terms are the terms you actually get.
Days payable outstanding How long until we pay
Payables against purchases. The one lever most businesses have and the one they use least deliberately.
Days inventory outstanding How long stock sits
Stock against consumption. This one does exist here, per item and overall, from the turnover report.
Cash conversion cycle Days your money is away
The first plus the third, minus the second. A single number that decides how much working capital growth costs you.
The fourth is not an extra measurement. It is the arithmetic of the other three, which is why having all the inputs and none of the outputs is a peculiar place to be.
What is actually here
Stock valuation, on a shared cost basis, at any date. Receivables ageing and payables ageing in buckets. A payments register that spans both of this product's payment paths so money out is visible regardless of which rail carried it. And an inventory turnover report that computes turns and days of inventory per item and overall, over any range, annualised — including consumption through the till, which an earlier version of that report would have missed entirely.
So the days-of-inventory half is genuinely built. What is missing is the receivables and payables equivalents, and the single figure that combines them.
The calculation somebody does in a spreadsheet each month
Illustrative figures. Every input on the left came out of this product; the three answers on the right did not, and the last line is the number the business is actually run on.
Eighty-five days is not a ratio. It is how long you fund your own growth before anybody pays you for it.
Why the omission is easy to make
Because each input is owned by a different part of the product. Stock valuation belongs to inventory. Receivables belong to sales. Payables and the register belong to finance. Each of those modules built a correct and complete report about its own domain.
The cycle belongs to none of them. It is a number about the business rather than about a module, and in a system organised by module those are exactly the numbers that fall between the floorboards.
This is the same shape as several other findings in this product: the parts are right and nothing owns the relationship between them. It is worth watching for in any system you evaluate, because it never shows up in a feature list — every feature is present.
Why it bites harder on a long supply line
Where goods travel a long way inland, the days-of-inventory component is large before anybody has done anything wrong. Stock is in transit, then at a depot, then at a branch, and the money was spent before the first leg.
A business in that position is financing a long cycle by construction, so the cycle is the constraint on how fast it can grow — not margin, not demand, not price. And it is the number the system does not produce.
One thing, sized in days, and a second that makes it useful
The gap file sizes this as small, and that is not optimism — every input already exists and is already correct. What is being added is arithmetic and a place to put it.
The three ratios and the cycle, as a report
Receivables and payables days computed on the same date basis as the existing turnover report, the cycle derived from the three, over any period. The inputs are already shared definitions, so the risk of the new number disagreeing with the old reports is low — which is the usual reason a derived metric goes wrong.
The trend, not the level
A single month's cycle tells you little; the direction over twelve tells you everything. The number is only actionable as a series, and building the report without the series is how a good metric gets looked at once.
How it works: you describe the requirement, we return a written scope, timeline and cost, and once agreed it is built into your environment and maintained as part of the product. This is one of the smaller pieces of work on this blog.
Talk to us about working capital reportingWhat AWRA OpsHub does today
- Stock valuation at a date, on a cost basis shared with cost-of-sales posting and margin reporting.
- Inventory turnover and days of inventory, per item and overall, over any range, annualised — with consumption summed from both the check-out path and till sales.
- Receivables and payables ageing in buckets, on calendar days.
- A payments register spanning both payment paths, so money out is visible regardless of rail.
- Customer credit exposure computed across balance plus every open invoice.
What it does not do
- Days sales outstanding.
- Days payable outstanding.
- A cash conversion cycle figure of any kind.
- Any of the above as a trend, a target or a dashboard tile.
- A cash flow forecast built from the ageing.
Not ours, by choice
- The gap file line for this predates the turnover report shipping and still says days of inventory is absent. It is not — that half exists. We are correcting our own record here rather than leaving a stale entry to mislead.
- This is sized as small work precisely because the inputs are correct and shared. If they were not, the ratios would be the least of the problem.
- Nothing here is Cameroonian, Gabonese or Chadian. Central Africa is here because long inland supply lines make the cash cycle the binding constraint on growth, which is the condition under which this omission stops being academic.
Four questions about working capital reporting
Show me days sales outstanding.
A good answer sounds like
A number, on a screen.
What it actually means
The single quickest test. Ours would send you to an export.
Does the stock figure in that ratio match the valuation report?
A good answer sounds like
Yes — same definition.
What it actually means
A derived metric computed from its own definition of stock is how two correct reports disagree.
Is it a trend or a single figure?
A good answer sounds like
A series.
What it actually means
One month's cycle is noise. Only the direction is a decision.
Which module owns this number?
A good answer sounds like
None — it is cross-cutting.
What it actually means
The honest answer, and the reason it is missing in most module-organised systems.
Do the arithmetic once, by hand
Export the three inputs this month and work the cycle out. Whatever system you end up with, you will then know what the number is and whether it is moving — which is more than most businesses can say.
Talk about working capitalFrequently asked questions
Can I get the inputs out easily?
Yes — stock valuation, the two ageing reports and the payments register all export. The month-by-month arithmetic is a spreadsheet somebody maintains, which is exactly the kind of spreadsheet that becomes load-bearing without anyone deciding it should.
Is days of inventory really available?
Yes, from the turnover report, per item and overall, annualised over any range you choose. That report also sums consumption from the till as well as from check-outs, which matters for any business selling over a counter.
Why is this rated as small work?
Because the difficult part of a derived metric is agreeing what its inputs mean, and those definitions are already shared across this product's existing reports. The ratios themselves are arithmetic.
