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?
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.
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
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.
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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!
Very good video, concise with easy to understand examples illustrated. Thank you very much!
Thanks so much! Glad it was helpful!
Super helpful Rule of Thumb framework for understanding positive and negative NWC in growing or declining biz
Glad it was helpful!
Insightful
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?
Thank you so much for your detailed explanation!
Pleased to hear that! Check out my other videos too. Thanks!
nice topic! thank you
Very helpful, Thank you.
Glad you found it helpful!
Thanks for the info. This is great!
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.
recorded a quick video for you here
@lun4rd409 : www.loom.com/share/41b70e72639440158fa38905bf35e34d?sid=7e56853d-ed78-4a7d-92a1-82b670a07401
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
Hey @jd. Sorry for the delay here. www.loom.com/share/844dedf4152c4a509b6d8679358f1c91
Very insightful, thank you.
Glad you found it helpful!
if nagative net working increase than change in working capital positive ?
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.
@@FinanceableTraining thank you very much
But what about liabilities like short term liabilities like loan repayments etc.
thats not part of the working capital definition (i.e. they dont have anything to do with the 'operation' of the business)
@@tsr6401 Thank you
@@tsr6401 Actually they are. There's a difference between working capital (WC) and NET working capital (NWC).
Aiming for Investment Banking, Private Equity, or Investment Management Roles? Ramp up faster with our (free) Finance Analyst Starter Kit! - finance-able.com/analyst-starter-kit/ or check out our courses at courses.finance-able.com/
Glad you found it helpful!
I have a small business how can i utilized the advantages of negative work capital if im experiencing it?
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!
@@FinanceableTraining thank you ❤️