Why Does Working Capital Matter? Many places define it as Current Assets minus Current Liabilities <br />- that is technically true, but it misses something important. <br />By http://breakingintowallstreet.com/biws/ <br />WHY does it matter? What is the point of this? How do you use it? How does it impact a company's value? <br /> <br />It's really the CHANGE in Working Capital that matters for valuation and financial modeling purposes. <br /> <br />Working Capital, by itself, does not tell you a terrible amount and could mean many different <br />things... but when you also look at the CHANGE in WC, what it is as a % of revenue and other metrics, AND the company's business model, that's when you start <br />gaining insights. <br /> <br /> <br />http://www.mergersandinquisitions.com/
