Working capital

Receivables, inventory and payables. Growth ties up cash in them even when the income statement looks healthy.

• Accounting
• Growth and business models

2 ideas that carry it

• Case studyAccountingBook

  Growth consumes cash, and a profitable company can still run out

  Profit is not cash, and growth widens the gap; model the cash a business needs to grow before admiring its sales.

  Any three-statement question, any growth company's cash flow, and any founder conversation about runway.

  From Shoe Dog · Phil Knight

• TechniqueAccountingVideo located

  Working capital is where growth eats cash, even when the income statement looks healthy

  Growth ties up cash in receivables and inventory, so model the working capital a business needs before trusting its profit.

  Three-statement questions, cash flow forecasting, and any growth company whose profit and cash are diverging.

  From Working Capital Explained · The Finance Storyteller