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| everyones situation is different, but the reason some of us hesitate to make that transaction is because the cash working capital sunk into the early payment on the longterm can't be recovered, unless it is paid off completely. Not only that, but nothing says they even renew the line next year. They wouldn't even need a reason for that. Then you're broke. So one might take it a step further, and use term loans for cash, rather than op line. We've made positive cash flow transactions, thereby building up working capital, at the expense of profitability because of the extra interest cost. If there are free and clear assets, one would lean towards less working capital, but net worth itself doesn't do anything. One might look at it a more aggressive way. If you made special payments earlier, eroding working capital, you might not be able to make the downpayment on the neighbors. | |
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Pknoeber and other bankers- working capital from down below
