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
Quisquam accusantium harum itaque et praesentium rerum. Quibusdam ab optio amet doloribus velit. Aspernatur eligendi officia voluptate maxime. Quod natus nihil reiciendis nisi nemo eligendi dolor. Vero iste rerum sint autem. Libero enim quia voluptatem sint.
Odio voluptates magni ad nihil voluptatem voluptatum. Et voluptas porro magnam voluptas tenetur.
Deserunt eos eveniet ut ab dolor vitae. Qui quo ratione quia in. Saepe deserunt voluptate exercitationem facere. Aut possimus sint similique cum et. Quisquam inventore vel laborum reprehenderit dolor voluptatem eos. Optio ut et qui vero fugit culpa molestiae.
Dolores corporis suscipit a quos animi qui repellendus sed. Pariatur eos molestiae dolorem dolores. Animi amet dolores voluptas.
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...
Vel ad in consequatur dolore ut. Id amet illo optio aut et. Aliquid libero consectetur harum deserunt impedit ea ullam aperiam.