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Compute DSO, DIO, DPO and the cash conversion cycle

  • For FP&A and financial analysts
  • You practice Catching mistakes and made-up facts
  • Time about 5 minutes
  • Level Intermediate

About this exercise

You're computing working capital days from annual figures. Write a prompt for plain text with lines starting "DSO:", "DIO:", "DPO:" and "Cash conversion cycle:", each with the math to one decimal on a 365-day year. DSO = receivables / revenue x 365. DIO = inventory / COGS x 365. DPO = payables / COGS x 365. The cycle is DSO + DIO - DPO. Don't mention targets or recommendations. Under 80 words. No bullets or numbering.

Common mistakes when you ask AI for this

  • Dividing DPO by revenue. The AI uses revenue for payables and gets 18.7 days. Try: Say: "DIO and DPO divide by COGS; DSO divides by revenue."
  • Mentioning the target. The AI compares 67 days to the 55-day goal or last year's 71. Try: Add: "Do not mention the target, last year's cycle or recommendations."
  • Cycle formula error. The AI adds all three days. Try: Add: "Cycle = DSO + DIO - DPO."
  • Markdown extras. The AI adds bold labels, headings and a closing note. Try: Say: "Plain text, no bold. Output only the lines asked for."
  • Trusting the AI to count words. AI is bad at counting and runs past word limits. Try: Ask for fewer words than the real cap and keep each line short.

What a strong prompt includes

  • Names the four lines
  • Gives the bases
  • Gives the cycle formula
  • Bans targets
  • Caps length

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