WorkingCap

Working Capital Management

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Actionable insights for working capital optimization.

Key Insights

High Overdue Receivables

50% of receivables are overdue. This poses a significant liquidity risk despite an improving DSO.

Strong Liquidity Position

The Current Ratio of 1.85 is above the industry average of 1.65, indicating a healthy safety margin.

Cash Conversion Cycle (CCC)
Time to convert investments to cash

52 days

Current Cycle

Days Sales Outstanding (DSO)42 days
Days Inventory Outstanding (DIO)45 days
Days Payable Outstanding (DPO)-35 days
Top Recommendations
1. Target Overdue Accounts
Focus collection efforts on the $370K overdue to immediately improve cash position.
2. Optimize Inventory
Reducing DIO from 45 to a target of 40 days could free up significant cash.
3. Negotiate Payment Terms
Explore extending DPO with key suppliers to further improve the cash conversion cycle.

Key Performance Indicators

Current Ratio
Healthy
1.85

Liquidity assessment

Days Sales Outstanding (DSO)
Healthy
42 days

Avg. collection period

Days Payable Outstanding (DPO)
Healthy
35 days

Avg. payment period

Days Inventory Outstanding (DIO)
Healthy
45 days

Avg. inventory holding period

Analytical Note
Interpreting DSO and Overdue Accounts

An improving Days Sales Outstanding (DSO) alongside a high overdue balance can occur. This often indicates that while large, recent invoices are being paid quickly (lowering the average), a significant volume of smaller or older invoices remain unpaid.
Recommendation: Ask the AI to "analyze receivables by customer segment" to identify where the collection issues are concentrated.

AI Assistant

CFO Working Capital Advisor

Good morning! I'm your Working Capital AI Assistant. I've analyzed your latest financial data and noticed some key trends: • Your working capital ratio has improved to 1.85 (above industry average of 1.65) • Cash position is strong at $12.4M, up 2.1% from last month • However, your cash conversion cycle at 52 days has optimization opportunities Your receivables collection has improved (DSO down 3 days to 42), but you still have $370K in overdue receivables that need attention. What specific area would you like to explore first?
Suggested Questions

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