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?
Trending Content - Investment Banking Forum
| +70 | Any tips for sleeping well? | 36 | 1d |
| +59 | Wealthy Parents / Jaded | 21 | 1h |
| +44 | Venezuela Debt Restructuring - LAZ vs CVP | 16 | 8h |
| +40 | Background check issue IB Full Time | 22 | 16h |
| +38 | How are hours rn for SA (interns) | 23 | 3h |
| +27 | Investment Banking in Mexico | 7 | 13h |
| +26 | HL vs WB | 19 | 1d |
| +24 | MM bottom bucket bonus | 9 | 1d |
| +23 | UBS GIG, LevFin, FSG Interns working Sundays and 85 hour weeks their first week? | 11 | 1d |
| +21 | Excel macros for QOL formatting | 0 | 1d |
Career Resources
...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.
Nulla voluptatem facere aliquid reiciendis fugit maiores. Voluptatem ea magni incidunt ab.
Dolorum dolorem omnis aut corporis illum soluta atque. Sit sed qui occaecati et consequatur et autem optio. Dolor nulla eum 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...