Understand financial metrics and coverage
Use this report guidance to distinguish reviewed operating profit measures from legacy catalog fields, and to understand when DSO, DPO, CCC, and the separate posted-cash depletion runway scenario can and cannot be answered. If the required period, history coverage, or classification setup is missing, the report refuses the unsupported question instead of guessing a duration.
Before you start
- You need access to the Reports area and the report builder in your workspace.
- For EBIT, EBITDA, and reviewed operating income or expenses, account classifications must be reviewed first in the operating-income classification setup.
- For DSO, DPO, and CCC, you need an exact reporting period or calendar period, the required history coverage, and the correct balance basis for the named method.
- For the posted-cash depletion runway scenario, you need the current accounting date, the last three completed calendar months, and a complete Bank/Cash Asset history in the selected Company currency.
- If your workspace has more than one ledger available in the report builder, choose the correct ledger before running the report.
What these metrics mean in Finanly
Finanly separates reviewed operating measures from older catalog fields. Reviewed operating income uses owner-reviewed operating revenue, reviewed COGS, and reviewed operating expenses. Older catalog fields such as operating income and operating margin may still reflect legacy all-income minus all-expenses logic, which is not the same as reviewed operating profit.
The same distinction applies to gross profit, operating margin, and related ratios. When you are looking for operating profit, use the reviewed classifications path. When you are looking for totals that include all posted amounts, understand that the legacy catalog can include nonoperating income, interest income, and income-tax amounts.
Supported reviewed profit measures
- Reviewed operating revenue: owner-reviewed operating-revenue accounts, excluding classified nonoperating income, interest income, and income-tax benefits.
- Reviewed COGS: owner-reviewed cost of goods sold, including depreciation and amortization classified within COGS.
- Reviewed operating expenses: owner-reviewed operating expenses, including operating depreciation and amortization, while excluding COGS, nonoperating, interest, and income-tax expenses.
- Reviewed operating income: reviewed operating revenue minus reviewed COGS minus reviewed operating expenses.
- Reviewed gross profit and reviewed gross margin: based on reviewed operating revenue and reviewed COGS.
- Reviewed operating margin: reviewed operating income divided by reviewed operating revenue.
How to prepare reviewed operating income, EBIT, and EBITDA
- Open the operating-income classification setup from the report builder link labeled Review account classifications for operating income, EBIT and EBITDA.Review account classifications for operating income, EBIT and EBITDA
- Review the account classifications for revenue, COGS, operating expenses, interest, income tax, depreciation, and amortization.
- Save the reviewed classifications before asking for EBIT, EBITDA, or reviewed operating income in a report.
- Run the report again after the classifications are in place.
EBIT and EBITDA are not answered from a broad expense total. EBIT needs verified interest and income-tax classifications. EBITDA also needs depreciation and amortization classification. If those classifications are not verified, the request is refused rather than substituted with another profit field.
How DSO, DPO, and CCC are handled
These metrics are duration questions, so they need more than a current balance. Finanly requires a verified definition for the metric, a valid time basis, and the right history coverage. A current receivable or payable balance does not replace those requirements.
| Metric | Accepted basis | Formula meaning | Zero or unavailable outcome |
|---|---|---|---|
| DSO | Either ending receivables or mean opening/closing receivables, matched to the selected method | Closing receivables or mean opening/closing receivables divided by signed net credit sales, multiplied by actual period days | Zero is valid when the numerator is zero and the denominator is positive; unavailable when the selected balance is negative, the credit-sales denominator is nonpositive, or the required history is missing. |
| DPO | Mean opening/closing payables divided by reviewed COGS | Mean opening/closing payables divided by reviewed period COGS, multiplied by actual period days | Zero is valid when the mean payables are zero and reviewed COGS is positive; unavailable when the mean payables are negative, reviewed COGS is nonpositive, or the required history is missing. |
| CCC | DSO plus DIO minus DPO using the same reviewed COGS basis for DIO and DPO | Ending-AR or mean-AR DSO, plus reviewed-cost DIO, minus reviewed-cost DPO | Zero and negative CCC values are allowed when the math supports them; unavailable when any component cannot be verified. |
What DSO means in practice
DSO is not a generic receivables ratio. The accepted DSO methods are distinct: ending receivables divided by net credit sales, or mean opening/closing receivables divided by net credit sales. These are separate methods and should not be treated as interchangeable.
For DSO, the period uses actual inclusive calendar days. The selected period must be exact, and the report refuses broader or vague timing such as a current balance without a period.
What DPO means in practice
DPO uses mean opening/closing payables divided by current reviewed COGS, multiplied by actual period days. It is not the average days to pay invoices and it is not elapsed paid-invoice time.
The report requires a verified reporting interval and reviewed COGS. If you ask for DPO without that setup, the report refuses the request rather than replacing it with paid invoice days or another payable measure.
What CCC means in practice
CCC uses DSO plus DIO minus DPO with the same reviewed COGS basis for the inventory and payable parts. Legacy inventory-history DIO uses a different denominator and must not be silently substituted into CCC.
CCC supports coherent positive, zero, and negative outcomes when the underlying components are verified. The report refuses the question only when the component history, period, or denominator cannot be proven.
How the separate posted-cash depletion runway scenario is handled
The posted-cash depletion scenario is a separate, explicitly named calculation. It uses all Bank/Cash Asset GL debits and credits, including adjustments and FX revaluations, across the last three completed calendar months. It is not physical cash flow, not classified operating cash flow, not unrestricted-funds proof, and not a forecast.
The scenario uses the current posted cash balance and the average monthly posted net cash depletion from those three completed months. Transfers between included cash accounts net out within the scenario. If the trailing depletion is nonpositive, the scenario does not produce a positive runway result.
| Situation | Meaning |
|---|---|
| Current posted cash is zero and depletion is positive | Runway is zero months. |
| Trailing net cash depletion is zero or negative | Runway is unavailable or not a positive burn result; the scenario does not treat accumulation as burn. |
| A current cash snapshot is requested without the three completed months | The scenario is refused because the duration basis is incomplete. |
What the report can and cannot answer
| Question type | Supported when | What you can expect |
|---|---|---|
| Reviewed operating income or expenses | Reviewed classifications are set up | The report can use the reviewed operating basis. |
| EBIT or EBITDA | Interest, tax, and for EBITDA also depreciation and amortization are verified | The report can use the named earnings measure. |
| DSO | Verified period, ending or mean AR method, and credit-sales history are available | The report can answer the duration metric. |
| DPO | Verified period and reviewed COGS are available | The report can answer the duration metric. |
| CCC | Verified period and all three component methods are available | The report can answer the duration metric. |
| Posted-cash depletion runway | Current accounting date and three completed months of posted cash history are available | The report can answer the separate runway scenario. |
| Unsupported duration request | Definition, timing, or history is missing | The report refuses the question instead of substituting balances or a different metric. |
When the report refuses a duration question
If you ask for DSO, DPO, CCC, or the posted-cash depletion scenario without the required definition, timing, or history, the report returns a refusal instead of a partial answer. This protects you from treating a balance snapshot as a confirmed duration result.
If the request is about DPO and the report does not have the required verified period or current reviewed COGS, you need to supply the missing setup first. The report will not invent the duration from current balances alone.
What to do if the result is missing or refused
- Check whether you are asking for a reviewed operating measure or a legacy catalog field.
- If you need EBIT or EBITDA, review the account classifications first.
- If you need DSO, DPO, or CCC, confirm the exact date range or calendar period and make sure the required history is available.
- If you need posted-cash depletion runway, confirm the current accounting date and that the report is using the last three completed calendar months of posted cash history.
- Run the report again after the setup is complete.
If the report still refuses the metric, the missing piece is usually the classification setup, the exact period, or the required history coverage. A different metric or a current balance cannot substitute for those prerequisites.
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