Negative Net Working Capital in Plain English

[@Retumn98716]

Very good video, concise with easy to understand examples illustrated. Thank you very much!

[@FinanceableTraining]

Thanks so much! Glad it was helpful!

[@is0sceles]

If a rent payment isn't due in 24 months, wouldn't that be a non-current liability? Why would it count toward current liabilities rather than non-current?

[@DrArtorias]

Super helpful Rule of Thumb framework for understanding positive and negative NWC in growing or declining biz

[@FinanceableTraining]

Glad it was helpful!

[@marekb.8435]

Thank you so much for your detailed explanation!

[@FinanceableTraining]

Pleased to hear that! Check out my other videos too. Thanks!

[@enemyonscythe]

Thanks for the info. This is great!

[@alitahsili]

Very helpful, Thank you.

[@FinanceableTraining]

Glad you found it helpful!

[@adityavishwakarma237]

nice topic! thank you

[@dimitriosgeorgakis9098]

Insightful

[@yeabsirasefr6209]

Very insightful, thank you.

[@FinanceableTraining]

Glad you found it helpful!

[@lun4rd409]

hi, I can't find the same formula on each video : I tried to compute the NWC of Apple for 2023 FY : CA - CL = 143,566M - 145,308M = -1,742M. Does it write ? Is there other ways to compute it ? Thanks.

[@FinanceableTraining]

recorded a quick video for you here @lun4rd409 : www.loom.com/share/41b70e72639440158fa38905bf35e34d?sid=7e56853d-ed78-4a7d-92a1-82b670a07401

[@Daniel-hd7te]

Is this how leveraged companies work?

[@jd5787]

Cool video, thanks for sharing. In the case of tech M&A, how would you deal with deferred revenue in the context of working capital adjustments? I assume the seller would wants DRs to be part of the WC instead of being counted as a loabolit66so that it is not a $ for $ offset against the valuation. Am I correct? Would all the DRs be included or some would be excluded from WC adjustments? (1 year prepaid vs multi year prepaid deals for instance). Thank you

[@FinanceableTraining]

Hey @jd. Sorry for the delay here. www.loom.com/share/844dedf4152c4a509b6d8679358f1c91

[@SuprajaPochampally-f9v]

But what about liabilities like short term liabilities like loan repayments etc.

[@tsr6401]

thats not part of the working capital definition (i.e. they dont have anything to do with the 'operation' of the business)

[@SuprajaPochampally-f9v]

@@tsr6401 Thank you

[@martysonn]

@@tsr6401 Actually they are. There's a difference between working capital (WC) and NET working capital (NWC).

[@sg.guruji9131]

if nagative net working increase than change in working capital positive ?

[@FinanceableTraining]

In short, that's correct. If a company with a negative NWC balance has an increase in that negative balance from one period to the next, it will result in an inflow of cash to the company.

[@sg.guruji9131]

@@FinanceableTraining thank you very much

[@FinanceableTraining]

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[@FinanceableTraining]

Glad you found it helpful!

[@imsophat990]

I have a small business how can i utilized the advantages of negative work capital if im experiencing it?

[@FinanceableTraining]

Hey there, sorry for the delay. In short, the typical way that this concept is utilized by small business is via pre-payments. For example, starting a subscription service where customers pay in advance. You see this a lot with small Software businesses. Hope that helps!

[@imsophat990]

@@FinanceableTraining thank you ❤️