Available modeling methods
| Method / input | Behavior |
|---|---|
| Amount | Explicit closing inventory per line and year. |
| Days / DIO | Positive annual COGS × inventory days ÷ 365. |
Inventory is a stock
Purchases reconcile COGS with the change in inventory. Increasing closing inventory can use cash without changing current COGS. The model does not assume negative purchases: inventory cannot fall below the opening stock less goods consumed. It does not invent an inventory disposal or write-off to achieve an impossible target.
Example workflow
With COGS of 3,650 and DIO of 60, the unconstrained target is 600. Reduce DIO in one forecast year and inspect inventory, purchases, supplier payments and CFO. Keep DPO constant to separate inventory effects from supplier-credit effects.
Documents the current implemented behavior. Example assumptions are not market data.