Working Capital Analysis AI Prompt

Analyze the working capital dynamics and cash conversion efficiency of this business.

Balance sheet and P&L data: {{financial_data}}
Periods: {{periods}}
Industry: {{industry}}

1. Working capital components:
   Net Working Capital = Current Operating Assets - Current Operating Liabilities
   - Operating current assets: Accounts Receivable + Inventory + Prepaid Expenses
   - Operating current liabilities: Accounts Payable + Accrued Expenses + Deferred Revenue
   - Exclude: cash and short-term investments (financing items)

2. Days metrics (DSO, DIO, DPO):
   - DSO = AR / (Revenue / 365): how quickly do customers pay?
   - DIO = Inventory / (COGS / 365): how long does inventory sit?
   - DPO = AP / (COGS / 365): how long before we pay suppliers?
   - CCC = DSO + DIO - DPO: net days of cash tied up in operations
   A negative CCC (e.g. Amazon, Costco) means the business is funded by its customers.

3. Trend analysis:
   - Plot DSO, DIO, DPO, and CCC over {{periods}}
   - Is the CCC improving (shortening) or worsening (lengthening)?
   - Are individual components driving the change?

4. Cash impact of working capital changes:
   - Change in NWC = NWC(end) - NWC(beginning)
   - Positive change = use of cash, negative change = source of cash
   - If revenue is growing fast: working capital will likely consume cash even if days metrics are stable

5. Industry benchmark comparison:
   - DSO, DIO, DPO vs industry median
   - Which components are out of line? (High DSO suggests collection problems; low DPO may mean supplier leverage is low)

6. Optimization opportunities:
   - DSO reduction: invoicing process, early payment discounts, collections follow-up
   - DIO reduction: inventory management, just-in-time ordering
   - DPO extension: negotiate longer payment terms with suppliers
   - For each lever: estimate the one-time cash release from a 5-day improvement

Return: working capital table across periods, CCC calculation, benchmark comparison, cash impact analysis, and optimization opportunities with cash value estimates.