Available modeling methods
| Method / input | Behavior |
|---|---|
| Operating NWC | Receivables + inventory + other current operating assets − payables − other current operating liabilities. |
| Broad working capital | Current assets minus current liabilities, including cash and the modeled current revolver. |
Day assumptions or explicit balances
Simple uses global DSO, DIO and DPO. Advanced supports Amount and Days for each receivable, inventory or payable line and year. Revenue supplies the DSO base; positive cost of sales supplies DIO and DPO. Other current positions can use amounts, growth or reference percentages in Advanced.
Changes, not closing stocks
An increase in operating assets uses cash; an increase in operating liabilities preserves cash. The cash-flow bridge uses changes and separates supported non-cash provision effects. Do not subtract the full closing NWC every year. The model constrains collections, purchases and supplier payments to available flows.
Build a collection scenario
Increase DSO in an Advanced scenario while leaving revenue unchanged. Inspect receivables, CFO and the funding requirement. A flow-through adjustment to sales can change ratio-driven working capital; explicitly scheduled balances require their own adjustment component when they should change.
Documents the current implemented behavior. Example assumptions are not market data.