# Payable / Receivable / Inventory Days

Payable Days

To calculate Payable Days, divide Accounts Payable by Non Payroll Expenses Per Day, or

```Payable Days = (AP)/ ((COGS + Marketing Expenses + G&A Expenses - Payroll)/ Days In Period)
```

Receivable Days

To calculate Receivable Days, divide Accounts Receivable by Revenue Per Day, or

``` Receivable Days = (Accounts Receivable) / (Revenue / Days In Period)
```

Inventory Days

To calculate Inventory Days, divide Inventory by COGS Per Day, or

```Inventory Days = (Inventory) / (COGS / Days In Period)
```

Receivable days divides the A/R by the  average revenue over the time period, so companies like Mike’s that have inconsistent revenue numbers will have the kinds of swings you are seeing when you compare long term to monthly Receivable Days.

For example, the Receivable days in a month with unusually high revenue will be lower than the Receivable Days for the entire year. January is the 5th highest revenue month for Mike (over 2x some of his other months), so Receivable days are higher than when you look at Average Revenue over the entire year.

Here’s the math:

• January A/R is \$2.9MM
• Average Monthly Revenue is \$60k in January, but Average Revenue for the past 12 months it was only \$33k.

Jan Receivable Days is 2,900,000 / 60,000 = 48.3