Answered step by step
Verified Expert Solution
Question
1 Approved Answer
What does negative Change in Net Working Capital indicated in a company? What is the assumption behind it? I am trying to make a discounted
What does negative Change in Net Working Capital indicated in a company? What is the assumption behind it? I am trying to make a discounted cash flow model of a company that designs products and outsource their manufacturing to foreign companies.
2018 | 2019 | Forecast Year 1 | Forecast 2 | |
Current assets | 600,000 | 700,000 | 700,000 | 706,999 |
Current liabilities | 644,000 | 650,000 | 750,000 | 768,880 |
Working Capital | -44,000 | 50,000 | -50,000 | -61,881 |
Change in NWC | 94,000 | -100,000 | -11,881 |
Negative change in NWC goes on like this for 10 years
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started