---
title: Financial Truth Model — TSync Intelligence
description: The single, formal definition of every financial figure the TSync Intelligence layer produces — base currency and FX rate methodology, inventory valuation, receivables/payables, cash, currency exposure, operational profit — with the Phase 1 baseline vs the Phase 2 model clearly delimited.
product: TSync Intelligence 11.3.6
language: en
canonical: https://docs.tsync.pro/modules/tsync-financial-truth-model/
source: https://docs.tsync.pro/llms.txt
---

# Financial Truth Model

The **single source of truth** for what every financial number in TSync
Intelligence *means*. Each metric the [Intelligence layer](tsync-intelligence.md)
exposes via `tsync_finance()` has exactly one definition here, so every advanced
module (Dynamic Valuation, FX Exposure, KPI) computes on the same basis and the
results are reproducible and auditable.

> **Scope.** This document defines *methodology*. Phase 1 ships the **baseline**
> definitions below (implemented in `Tsync_finance_service`). Items marked
> **[Phase 2]** are formally defined here but their full computation is deferred.

---

## 0. Conventions

- **Base currency** — `tsync_fx()->base()` (the accounting base, e.g. `RON`),
  from option `tsync_acc_base_currency`. All aggregates are expressed in base.
- **Accounting rate** — `tsync_fx()->rate(CUR, date)`: the rate of `CUR`→base on
  a date, sourced from `Tsync_currency`. **Rate-date rule:** Romania uses the
  **previous business day's** BNR rate; Moldova uses the **same day's** rate. The
  base currency is rate `1.0` by definition.
- **Conversion** — always *via base*: `convert(amount, from, to) = amount ×
  rate(from) ÷ rate(to)`.
- **Rounding** — monetary aggregates round to **2 decimals**; per-unit costs and
  snapshot item values retain **4 decimals** internally.
- **Versioning** — every metric row carries `calc_version` + `calculated_at`
  (bumped on each recompute) so a stale value is detectable. A change to a
  definition here is a **methodology version** bump (see §8).

---

## 1. Inventory valuation

$$\text{InventoryValue} = \sum_{\text{stock rows}} (\,qty \times avg\_cost\,)$$

- Source: `tsync_stock` — canonical on-hand column **`qty`** (never `qty_on_hand`),
  unit cost **`avg_cost`**.
- Cost method: **AVCO** (moving weighted average) — `avg_cost` is maintained by
  the warehouse posting path on every receipt.
- `tsync_finance()->getInventoryValue()`. Already in base (stock is valued in base).

## 2. Receivables

$$\text{Receivables} = \sum_{\text{open customer invoices}} (\,total - \text{payments}\,)$$

- **Open** = invoice status ∈ { `unpaid` (1), `partially_paid` (3), `overdue` (4) }.
  Paid (2) and cancelled (5) are excluded.
- `total` is the invoice gross; `payments` is the sum of recorded payments for it.
- `tsync_finance()->getReceivables()`. Non-base invoices: see §6.

## 3. Payables

$$\text{Payables} = \sum_{\text{open supplier invoices}} (\,total - \text{payments}\,)$$

- **Open** = supplier-invoice status not in { paid, cancelled }.
- `tsync_finance()->getPayables()`.

## 4. Cash balance (operational-cash proxy)

$$\text{Cash} = \sum \text{customer payments} - \sum \text{supplier payments} - \sum \text{expenses}$$

- A movement-based **proxy**, not a reconciled bank balance. True bank/period-close
  reconciliation is **[Phase 2]**.
- `tsync_finance()->getCashBalance()`.

## 5. Currency exposure

$$\text{Exposure} = \sum_{\substack{\text{open receivables}\\ \text{cur} \neq \text{base}}} \text{baseValue(open amount)}$$

- The base-currency value of **open, non-base-currency** receivables — the amount
  at risk to FX moves. `tsync_finance()->getCurrencyExposure()`.
- **Baseline** indicator: it measures exposure, not realised/unrealised gain/loss.

## 6. FX gain / loss methodology  **[Phase 2 computation]**

Formally: for a foreign-currency item booked at rate $r_0$ on date $d_0$ and
valued/settled at rate $r_1$ on date $d_1$,

$$\text{FX gain/loss} = \text{amount}_{\text{cur}} \times (r_1 - r_0)$$

- **Unrealised** (open items): $r_1$ = reporting-date rate.
- **Realised** (on settlement): $r_1$ = settlement-date rate.
- **Rule:** revenue/expense and asset/liability items are recorded at the
  **historical rate** ($r_0$) at recognition; revaluation uses the **current rate**
  ($r_1$); the difference is the FX gain/loss. Phase 1 records exposure (§5) and
  the rates (§0); the booked gain/loss line is Phase 2.

## 7. Operational profit

**Phase 1 baseline** — `tsync_finance()->getOperationalProfit($days)`:

$$\text{OpProfit}_{\text{baseline}} = \text{revenue}_{\text{window}} - \text{expenses}_{\text{window}}$$

**[Phase 2] true operational profit** — formally:

$$\text{OpProfit} = \text{revenue} - \text{COGS} - \text{operating expenses} \pm \text{FX gain/loss} - \text{accruals/deferrals}$$

where **COGS** is drawn from AVCO at the moment of sale (not period-end cost),
FX gain/loss per §6, and accruals/deferrals per recognition date. **Operational
cost** = COGS + operating expenses (excludes financing and tax). The baseline
deliberately omits COGS, FX gain/loss and accruals — do not treat it as audited
profit.

## 8. Methodology versioning & reproducibility

- Each metric stores `calc_version` (data recompute count) and is produced under a
  **methodology version** (the version of this document). A change to any formula
  here increments the methodology version; snapshots record the methodology in
  effect so a historical figure can always be reproduced from the same inputs.
- **Reproducibility contract:** the same dataset + the same methodology version
  must produce the same numbers (the basis for the audit/research mode).

## 9. Phase 2 roadmap (not yet binding)

COGS-based operational profit, booked FX gain/loss, bank/period-close
reconciliation, accruals/deferrals, multi-company consolidation, and
historical-rate vs current-rate revaluation scenarios.

---

*Implemented by `application/libraries/Tsync_finance_service.php` (baseline) and
`Tsync_fx_service.php` (rates). Validated by `tests/sim/intelligence_finance_snapshot_sim.php`
and `tests/fx_service_test.php`.*