Glossary

Definitions used on this site

This glossary focuses on terms that commonly appear in technology ROI business cases.

Terms

ROI (Return on Investment)

A simple ratio that compares net benefits to investment over a defined time period. ROI is sensitive to the time window and to what you count as costs and benefits.

DSO (Days Sales Outstanding)

A receivables measure that approximates how many days it takes to collect revenue.^[1]

DPO (Days Payables Outstanding)

A payables measure that approximates how many days it takes to pay suppliers.^[1]

CCC (Cash Conversion Cycle)

A working capital concept that connects receivables, inventory, and payables timing.

NPV (Net Present Value)

The present value of expected future cash flows discounted at a chosen rate.

IRR (Internal Rate of Return)

A discount rate that makes NPV equal to zero. IRR can be useful but can mislead when cash flows are non standard.

Payback

The time required for cumulative benefits to recover the initial investment.

WACC (Weighted Average Cost of Capital)

A common proxy for a company's cost of capital used to discount cash flows in NPV models.^[2]

Productivity realization

A factor that represents how much of modeled productivity improvement is actually captured in practice due to adoption, constraints, and the pace of change.

One-time implementation costs

Non-recurring costs required to implement a change, such as implementation services, internal project time, and initial training.

Fully loaded labor

Labor cost that includes wages, payroll taxes, benefits, and a reasonable allocation of overhead.

Sources used on this page

1. JPMorgan: DSO and DPO: how they can improve your cash flow

   Definitions and practical framing for receivables and payables cycle metrics and cash flow impact.

   Accessed 2025-12-12

2. Aswath Damodaran, NYU Stern: WACC central

   Overview and related references for WACC and cost of capital estimation.

   Accessed 2025-12-12