How to forecast working capital items ?
Hi everyone ! I'm wondering how can I forecast working capital and more specifically " current asset or current liabilities". I first took the opening and the closing balance previous year and I calculated the variation. But, I would like to find a better methods. If you can suggest me some articles, website I would be glad.
You should use the efficiency ratios: DPO, DSO and DIO (look fo them on google).
It means relating the WK investments to revenue trends and then you can hypothize efficiency performance --> improvements or worsening of management of WK based on assumptions of the companies and industry features
Sorry for the late reply. Thank you for your response! I am also searching how to forecast accrued payroll ? by any chance, do you have a method as well?
Given that I have never forecasted it, I would opt for one of the following methods, ordered form the one I would use to the last chance:
Each one using the same formulas used in the DPO,DSO and DIO but substituting the denominator with the measure I suggested in the bulllet points.
Thank you for your clear explaination :) I will try
You need to look at pay period timing if you're trying to get a very accurate accrued payroll balance.
If you're just looking for trends then Ajeje's methods are fine, but if you need a specific 12/31 balance (and it's material) you need to look at pay periods. If employees are paid every 2 weeks then timing could make a big difference in the accrual
Aut ducimus non unde quo officiis dolores repellat. Autem non culpa impedit voluptas voluptatem enim aspernatur voluptas. Distinctio non esse debitis doloremque ut. Aut qui sit non ipsam qui cupiditate rerum.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Sed qui aut sit voluptatem officia saepe. Repellendus nihil hic sit molestiae et nam voluptatibus. Ad sit vel inventore alias. Qui nam enim maiores et. Nihil ea quibusdam cum quidem.
Est eos voluptas eaque minima et voluptatibus. Incidunt debitis sapiente illum illo.
Dolorem optio error quidem vel recusandae recusandae aut. Facilis modi ipsa qui ut deleniti dolores non.