What's the best way to deal with working capital items in a case study environment (~30 to 45 min model and a short write up)? I would usually do the standard WC schedule but that takes time that I don't have. For those of you who have done PE case studies in recruitment, do you usually just get fast enough to incorporate the WC schedule, project an increase (use of cash) as a % of sales / COGS or something else?
Similarly, do we assume D&A and capex as a % of sales, do a D&A schedule, or set them equal to each other?
For a 30-45 minute model, calc WC and depreciation as a % of sales
Never had an issue.
And capex is handled as a separate hard code / assumed to be equal? Also, for WC do you split in between AR / Inv on the assets side and AP on the projected balance sheet, or are you projecting change in working capital
For capex, I model out a separate line item (sometimes break it into maintenance / growth capex) and model it as a % of sales. Keep capex % higher than depreciation (or make it equal by the final year) so you don't depreciate your PP&E to zero. They usually give you a CIM with all of the assumptions you need.
You don't need to model out individual WC line items for a 30-45 minute test. Just do WC as a % of sales, then take the change in WC from one year to the next for your CF calc.
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