Module I· Earnings Quality & Red FlagsIntermediate
Question
How do you use DSO, DPO, and DIO as earnings-quality indicators?
Answer
DSO, DIO, and DPO reveal cash conversion and working-capital quality. DSO + DIO - DPO gives the cash conversion cycle.
Deep diveShow more details
Quarter-end improvements that reverse immediately after closing can indicate working-capital window dressing.