Forecasting With Days Inventory Outstanding
Use the Days Inventory Outstanding form to forecast the closing Inventory balances at the General Ledger level. To calculate the expected closing Inventory balances for validation, enter the expected number of days for inventory outstanding for open periods. To do this, use the historical Actual Days Inventory Outstanding (DIO) as reference.
The form values update based on the following calculations:
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COGS Per Day = Total COGS ÷ Trending Days in Month.
The Total Cost of Goods Sold is derived from the Income Statement.
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Inventory in Stock Closing Balance = Days Inventory Outstanding × COGS Per Day.
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Inventory in Stock Monthly Movements = Previous Period Closing Balance – (Days Inventory Outstanding × COGS Per Day)
Or
Inventory in Stock Monthly Movements = Previous Period Closing Balance – Forecast Period Closing Balance.
If you have not already done so, ensure the Days in Month form is filled before you begin following the steps.
To calculate the closing balances of Inventory in-stock for open periods:
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From the Home page, go to Financials > Balance Sheet Trending.
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Click Days Inventory Outstanding.
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In the Point of View, select a Version, Subsidiary, and Currency.
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To apply the changes, click the Go icon
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Review the Total Cost of Goods Sold projection for the Forecast periods.
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In the Days Inventory Outstanding row, click a cell (data area) and enter the number of days that the inventory is expected to be outstanding. This is based on past historical Actuals.
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Click Save.
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(Optional) To populate the Balance Sheet with the adjusted data, right-click the data grid and select Aggregate to Balance Sheet. The form populates with data in the input currency.
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(Optional) To have your changes reflected in the relevant financial statements in the input and reporting currencies:
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Go to the Home page and click the Rules card.
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Beside the ruleset NFS_All Accts Forecast Data Refresh, click the Launch arrow.
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