Ahmadreza SamadiThe sale happened. The cash is still on its way.
Sales alone do not tell Sami how much cash is available today.
Original English animated explainer with synthetic narration, English captions and the AS+a-samadi.com watermark. Sami, the lamp workshop and the numbers are fictional teaching devices. The arithmetic illustrates timing averages, not actual business data, released cash, a dated cash forecast or personalised financial advice. Agreed supplier-payment terms still apply.
The situation
Sami runs a fictional lamp workshop. Orders arrive, but the timing of inventory, customer collections and supplier payments still matters. Sales alone do not tell Sami how much cash is available today.
What the source supports
BDC (the Business Development Bank of Canada) explains the cash conversion cycle using average inventory days plus average receivable days minus average payable days. It is a timing measure, not a bank balance. [BDC]
The fictional example
Our original fictional example is 30 + 20 − 15 = 35 days: thirty inventory days, twenty collection days, fifteen supplier-payment days. If collection becomes fifteen days while the other averages stay unchanged, 30 + 15 − 15 = 30 days. The illustration reduces the cycle by five days; it does not calculate cash released or predict an actual business.
Practical questions
The practical framework is inventory → collection → supplier clock. Check the same period and consistent definitions before comparing averages. Honour agreed payment terms; do not treat a longer payable period as permission to pay late. Use a separate dated cash forecast for actual commitments.
Limits and disclosure
The workshop and numbers are invented for arithmetic only. No ideal cycle, financing result or personalised financial advice is claimed. Machine-assisted source review is not professional financial review.
About the author
Ahmadreza Samadi — https://a-samadi.com