| Edward - 1/3/2016 19:46
The way working capital is figured isn't accurate.
I guess bank regulators are going to figure the way they're going to figure, whether we agree with it or not doesn't matter. Better just learn it. I used to think kinda the way you are thinking, then got a whipping I hope I won't forget. Also, you imply cashflow is income minus expenses. That's pretty much wrong I believe. And also, not only do banks not have to make you a loan, but they can call the loans you already have in, due to their own financial condition. So your notion that one can always refinance might be overconfident someday, regardless of net worth. Wouldn't cash flow be the change in working capital from one year end to the next?
Edit: I suppose cash flow, being the change in the cash accounts, isn't exactly the change in working capital
Edited by SquareG 1/3/2016 21:08
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Working Capital 2016
