Master working capital management using key turnover ratios and day conversions. This guide covers six essential metrics, including the formulas and 3-statement model examples you need to understand how working capital flows through a financial model.
Accounts Receivable Turnover
What it measures: Efficiency of collecting receivables.
Accounts Receivable Days
What it measures: Average days to collect receivables.
Accounts Payable Turnover
What it measures: How quickly a company pays suppliers.
Accounts Payable Days
What it measures: Average days to pay suppliers.
Inventory Turnover
What it measures: Efficiency of inventory management.
🔍 Inventory Turnover Concept & Practices
Inventory Days
What it measures: Average days inventory is held.
🔍 Inventory Days Concept & Practices
Conclusion
These six metrics form the foundation of working capital management and are essential for effective financial modeling. For a deeper understanding and hands-on practice, explore the interactive 3-statement forecast examples linked above, as well as our Balance Sheet Forecast Practice and Cash Flow Building Practice .