does this make sense?
If a business had no recievables (everything is sold via cash or credit card), all else equal, if revenues grow, then NWC should decrease right?
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...assuming the journal entry the journal entry is: Debit Cash Credit Inventory Debit COGS Credit Sales Revenue/Retained Earnings
By my logic, NWC should increase by the profit of revenue (increases cash on B/S) over COGS (decreases inventory on B/S)
But do I bankers care about NWC? I thought the concept was just thought of as working capital in general, without regard to the "net" derived by subtrating liabilities from assets...but I'm just guessing there..
Yes, bankers care about this number. In M&A transaction / restructuring this can be a factor. (Do not have time to explain this in detail)
^I'm NOT an accountant, ha. Did well in my accounting classes, though. Just wanted to go with the JE format to be extra-explicit.
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