Free ebook on working capital management: improve receivables, payables, inventory, cash conversion cycles, and finance KPIs.
Free ebook content
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Working Capital in Corporate Finance: Cash, Profit, and Operating Decisions
+ Exercise: In the mini-case, why can profit be recorded on Day 20 even though no cash has moved yet?
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Receivables (Accounts Receivable): Credit Sales, Billing, and Collection Impact on Cash
+ Exercise: A company’s sales and gross margin stay the same, but customers begin paying later than before. What is the most likely impact on the company’s cash needs?
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Credit Terms and Pricing: Net Terms, Discounts, and Risk Trade-offs in Receivables
+ Exercise: A company wants to reduce the working capital tied up in receivables without offering blanket longer payment terms. Based on the scenarios described, which approach best achieves that goal while still giving customers flexibility?
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Collections and Cash Forecasting: From Invoice to Cash
+ Exercise: When building a short-term weekly cash receipts forecast from accounts receivable, which approach best reflects how collections information should be used?
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Payables (Accounts Payable): Supplier Terms, Cash Preservation, and Relationship Management
+ Exercise: A company wants to preserve cash without increasing the risk of supply disruption. Which approach best aligns with effective accounts payable management?
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Negotiating Supplier Terms and Building a Payables Strategy
+ Exercise: When evaluating whether to accept a supplier’s offer of 15 extra payment days in exchange for a price increase, what is the most appropriate way to decide if it is a “false win”?
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Inventory in Working Capital: Why Stock Ties Up Cash and How It Supports Service Levels
+ Exercise: Which statement best explains why holding more finished goods inventory can increase both customer service levels and working-capital cash tied up?
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Inventory Strategies: Reorder Points, Safety Stock, EOQ, and Lean Trade-offs
+ Exercise: A team keeps triggering replenishment orders too late even though on-hand inventory still looks sufficient at the time of reorder. Which change most directly addresses a common cause of this issue?
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Cash Conversion Cycle: Linking Receivables, Payables, and Inventory into One System
+ Exercise: Which combination of metric changes will typically reduce the cash conversion cycle (CCC), given CCC = DSO + DIO − DPO?
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Working Capital KPIs Finance Teams Use: DSO, DPO, DIO, Aging, Turns, and Service Metrics
+ Exercise: A team notices DPO has changed after switching the denominator from Purchases to COGS. According to common pitfalls, what is the most appropriate interpretation and response?
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Operational Choices to Financial Outcomes: Scenario Analysis and Practical Controls
+ Exercise: A company wants to raise safety stock, which will tie up additional cash in inventory. According to cash-neutral policy design, what is the best complementary action to keep the net cash impact manageable while still supporting service goals?
About the free ebook
Working Capital 101: Receivables, Payables, and Inventory in Corporate Finance
This free ebook explains how everyday operating decisions shape liquidity, cash flow, and financial resilience. Learn how receivables, payables, and inventory work together as the core components of working capital.
Connect operating activity to cash
Sales can increase profit without immediately increasing cash. The ebook shows how credit sales, invoicing, collection timing, supplier payment terms, and stock levels affect the cash available to run and grow a business.
Manage receivables with control
- Assess the cash impact of credit terms and early-payment discounts.
- Understand billing, collections, aging, and cash forecasting.
- Balance sales growth, customer relationships, and credit risk.
Use payables strategically
Explore how supplier terms can preserve cash while maintaining dependable vendor relationships. The material addresses payment timing, term negotiation, and the trade-offs involved in a practical payables strategy.
Optimize inventory without harming service
Inventory supports customer availability, but it also ties up capital. Discover the financial role of reorder points, safety stock, economic order quantity, inventory turns, and lean operating choices.
Measure the full cash cycle
Bring receivables, inventory, and payables into one view through the cash conversion cycle. Learn the purpose of DSO, DPO, DIO, aging reports, turnover measures, and service metrics when evaluating working-capital performance.
Apply financial thinking to operations
Use scenario analysis and practical controls to evaluate how changes in collection speed, purchasing policies, inventory levels, or supplier terms can influence cash, risk, profitability, and service outcomes.
What is the cash conversion cycle formula?
Cash conversion cycle equals DIO plus DSO minus DPO.
How do accounts receivable affect cash flow?
Credit sales create receivables, so cash is delayed until customers pay invoices.
What is the difference between DSO, DPO, and DIO?
DSO measures collection time, DPO measures payment time, and DIO measures how long inventory is held.
This ebook includes:
11 content chapters
Digital certificate of course completion (Free)
Exercises to train your knowledge
100% free, from content to certificate
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