Projecting Working Capital and Capital ExpeX
Hey Folks,
Does any body have an idea what would be the drivers for projecting Working capital and CAPEX? I would like to learn and apply the best and detailed way to project and drivers the behind it.
What accounts of Working Capital I need to worry about and their drivers: For example do I have project all the accounts in the Current assets ( Eg AR, unbilled Revenue,) Current Libilites ( AP, NOTE Payable) or DO I have to pick and choose.
Just check my FCFE & FCFFknowledge:
If there is an increase in Working Capital you minus it and decrease you add it and the same for CAPEX?
Your kind help will be apprecaited!





You do not project all the
You do not project all the current assets... for working capital purposes you only calculate the ones that the firm can influence ie ST tax liabilities are not modified... as for the debt payable, you don't calculate that there, you include it in the debt schedule and for modelling purposes consolidate with all debt...
you have to understand the company's books in order to accurately project working cap... you have to understand where the inefficiency is in both the recievables, payables and a reasonable adjustment in order to increase cash but not destroy relationships... so if you want to do hairline adjustments, you can increase/decrease by a few turns/days to conservatively increase cash.
if working cap increases thats negative cashflow... if working cap decreases thats positive cashflow...
capex is always negative to cashflow unless its an asset disposition in which case it increases cash....
thanks
But What accoutns of Current Assets and Liab I shoud not forecast ? How about cash and short term investmets? notes payable? Would you know i could see an example in excel ? thanks !
thanks
But What accoutns of Current Assets and Liab I shoud not forecast ? How about cash and short term investmets? notes payable? Would you know i could see an example in excel ? thanks !
Cash and short term
Cash and short term investments should be a product of the cash flow statement. Notes payable should be accounted for in a debt schedule, which would flow into the balance sheet.
Google financial projection
Google financial projection model or something similar and you should get some examples
accounts
But What accoutns of Current Assets and Liab I shoud not forecast ? How about cash and short term investmets? notes payable? Would you know i could see an example in excel ? thanks !
cash is linked to the end cash balance in the CF statement...
Notes payable is flowed from the debt schedule through the cashflow and should not be visible in the balance sheet.... for modeling purposes, it should be consolidated with it's respective debt piece...
standard accounts:
A/R
Inventory & WIP
Prepaid Expenses
Other current assets
A/P
Accrued Expenses
Other Current Liabilities
accounts
But What accoutns of Current Assets and Liab I shoud not forecast ? How about cash and short term investmets? notes payable? Would you know i could see an example in excel ? thanks !
cash is linked to the end cash balance in the CF statement...
Notes payable is flowed from the debt schedule through the cashflow and should not be visible in the balance sheet.... for modeling purposes, it should be consolidated with it's respective debt piece...
standard accounts:
A/R
Inventory & WIP
Prepaid Expenses
Other current assets
A/P
Accrued Expenses
Other Current Liabilities
Yeah; you also want to
Yeah; you also want to project using the following methods:
A/R- days receivable
Inventory- inventory turnover
prepaid/other- % of revenue
A/P- days payable
accrued/other- % of COGS or % of expenses