Working Capital Performance KPIs Important in most businesses Can get off most Income Statements and Balance Sheets Published standards for WC numbers by industry Dell Corporation knows WC
KPIs in More Detail Working Capital Performance KPIs CCC (Cash Conversion Cycle) AR - Open Receivables AR - Credit Sales AR - DSO (Days Sales Outstanding) AP - Open Payables AP - Spend or COGS AP - DPO (Days Purchasing Outstanding) INV - Cost of Goods Sold INV - Inventory Value INV - Inventory Turns INV - DIO (Days Inventory Outstanding)
KPI - Accounts Receivable Working Capital Math 101 - AR DSO = Accounts Receivables / (Credit Sales / 365) The lower the number the better. For example, If your DSO is 40, then the average number of days it takes to collect on receivables is 40 days. That means your financing your customers cash for 40 days.
KPI - Accounts Payable Working Capital Math 101 - AP DPO = Accounts Payables / (COGS / 365) The higher the number the better. For example, If your DPO is 40, then the average number of days it takes to pay a bill is 40 days. That means your vendor is financing your cash for 40 days.
KPI - Inventory Working Capital Math 101 - Inventory Inventory Turns = Yearly COGS / Period End Inventory Value The higher the number the better. Companies calculate COGS differently. Some annualize COGS or use rolling 12 months. DIO = 365 / Inventory Turns Tells how long items sit in inventory. Lower is better.
KPI – Cash Conversion Cycle Working Capital Math 101 CCC = DSO + DIO – DPO The smaller the number the better. Negative CCC means you sell something to a customer and get the cash for the sale before you have to pay your vendors. Each industry has published CCC numbers to be used as benchmarks CCC highlights how well a company manages its supply chain. Dell has always been very good at this.
Reporting / Dashboards / KPIs / Strategy Drill Path FSGs Transactions Sub-Ledgers General Ledger KPI Data Model FSG Data Model General Ledger / Sub Ledger Data Model Transactional Data Model Reporting / Dashboards
FSG – What Management Knows as Truth Row Sets (Rows) - Dimension Set of Accounts (GL Balances) Calculation Period - Dimension Budget or Actual - Dimension Set of Books – Dimension Column Sets – Metric Value
Breakdown of Inventory KPIs WC – Inventory Turns, DIO Cost of Goods Sold General Ledger Inventory Value Sub-Ledger Transactions General Ledger Sub-Ledger Transactions GL Balances GL Headers GL Lines MTL Material Transactions MTL Transaction Accounts On Hand Quantities Item Costs GL Balances GL Headers GL Lines
KPI Model – Single Table KPI Column PERIOD_VALUE PERIOD_TYPE KPI_CLASS KPI_NAME KPI_ACTUAL_VALUE KPI_PLANNED_VALUE KPI_PERCENT_ATTAINMENT KPI_DRILL_ATTRIBUTE1 - 10
KPI Model – Single Table PERIOD_VALUEPERIOD_TYPEKPI_CLASSKPI_NAMEKPI_ACTUAL_VALUEKPI_PLANNED_VALUE BacklogBooked (not Shipped)923.97818 Accounts PayableOpen AP $8477.77635 Accounts ReceivableOpen AR $42192.567 Accounts ReceivableOpen AR (61+ Days Old)42192.567 2-FebPERIODFSG - Income StatementNet Sales21720780.5522000000 2-AprPERIODFSG - Income StatementNet Sales22976749.322000000 2-JanPERIODFSG - Income StatementNet Sales20787848.4522000000 2-MarPERIODFSG - Income StatementNet Sales23600349.6422000000 2-MayPERIODFSG - Income StatementNet Sales26189956.3522000000 2-FebPERIODFSG - Income StatementCost of Goods Sold11573221.7812000000 2-AprPERIODFSG - Income StatementCost of Goods Sold16577141.1612000000 2-JanPERIODFSG - Income StatementCost of Goods Sold12860329.2912000000 2-MayPERIODFSG - Income StatementCost of Goods Sold16818850.3112000000 2-MarPERIODFSG - Income StatementCost of Goods Sold16297571.7712000000 2-AprPERIODFSG - Income StatementOperating Expenses5954034.546000000 2-FebPERIODFSG - Income StatementOperating Expenses11140687.596000000 2-MarPERIODFSG - Income StatementOperating Expenses6605636.046000000 2-JanPERIODFSG - Income StatementOperating Expenses5582273.316000000 2-MayPERIODFSG - Income StatementOperating Expenses5439291.016000000 BacklogExpected Ship $923.97818 BacklogEntered (Not Booked)10.196 Accounts PayableOpen AP (Due in 30 days)8477.77635
Inventory KPI Drill Path WC – Inventory Turns, DIO KPIs FSG / non-FSG General Ledger Fact Table Inventory Turns Details Period, KPI Class, KPI Name Period, Account Structure, Set of Books Inventory Value Details Inventory COGS Details Period, Account Structure, Set of Books, Item, Inventory Org, Operation Unit, Transaction Type, …. Sub-Ledger and Transactional Details
KPI Model – Benefits Simple Approach KPIs in Multiple Dashboards Single Version of the Truth Have underlying Drill Details Self Documenting