Payable / Receivable / Inventory Days

How does CFO Scoreboard calculate the "RIP" days shown on the Reports page?

Or in other words:

Each of these optics are extremely useful. If you'd like to know more about what they mean, we'd recommend taking a look at our video on Money Left On the Table and Keith's Big 6.

Meanwhile if you want to know how these are calculated, take a look below ...

Receivable Days

This term is also commonly referred to as Days Sales Outstanding, or DSO.

Receivable Days is calculated on a monthly basis with this formula:

Receivable Days = (Accounts Receivable) / (Revenue / Days In Month)

In plain English it works like this:

1. First we divide total Revenue for the month by the number of days in the month.
2. Then we divide ending Accounts Receivable for the month by the quotient from #1.

Note that in order for this metric to show at all, you must have at least one account classified as Accounts Receivable on the company's  Classify Accounts screen.

Payable Days

This term is also commonly referred to as  Days Payable Outstanding, or DPO.

Payable Days is calculated on a monthly basis with this formula:

Payable Days = (Accounts Payable) / ((COGS + Marketing Expenses + G&A Expenses - Payroll) / Days In Month)

In plain English it works like this:

1. First we calculate non-payroll expenses by summing together COGS, Marketing Expenses, and G&A, and then subtracting out all accounts that are marked as Payroll expenses.
2. Then we divide the sum from #1 by the  number of days in the month.
3. Finally we divide total ending Accounts Payable for the month by the quotient from #2.

Note that in order for this metric to show at all, you must have at least one account marked respectively as COGS, Marketing & Sales, General & Administrative, Payroll Expense, and Accounts Receivable, on the  Classify Accounts screen.

Inventory Days

This term is also commonly referred to as  Days Sales of Inventory, or DSI.

Inventory Days is calculated on a monthly basis with this formula:

Inventory Days = (Inventory) / (COGS / Days In Month)

In plain English it works like this:

1. First we divide total COGS for the month by the number of days in the month.
2. Then we divide ending Inventory for the month by the quotient from #1.

Note that in order for this metric to show at all, you must have at least one account classified respectively as COGS and Inventory, on the  Classify Accounts screen.