NEGATIVE WORKING CAPITAL MAGICAL BUSINESSES
Ist Update - 09May2020

-ive Working Capital usually BAD Sign. These Stocks are EXCEPTION. Reason in Thread.

#NegativeWorkingCapital #WorkingCapital #Mulford #FreeCashProfile #Stocks #Indianstocks

Qns/Feedback/Retweets - Welcome

1/n

-ive Working Capital when Current Assets < Current Liabilities

Liabilities needed to pay within 1yr > Assets that can be liquidated in 1yr

+ive WC sign of financial strength (provided Inventory & Receivables are under control)

Can easily cover their short term liabilities

2/n

-ive WC Boon for some business.

- Generate CASH Quickly & Sell their products/services before paying Suppliers. Can grow on Supplier Money.

- Collect money Upfront (don't supply on credit).

- Helps in booming their sales

- May not need much financing.

3/n

- Technically getting current assets financed by Suppliers upfront money may result Saving on Interest Cost.

- Usually have very high turnover.

E.g. Restaurant(McDonald)
Online Retailers(Amazon)
Discount Retailer(Walmart)
Grocery stores, telecom, broadcasting companies

4/n

FREE CASH PROFILE methodology developed by Professor Mulford of Georgia Tech University

Measures business capacity to Generate Free Cash Flow as its Revenue Grows

Reported as a %age of Revenue & defines a company's Cash-generating ability as a point of time.

5/n