Question

WC is usually defined as non cash current assets - non debt current liabilities. What happens if the WC is always negative due to the fact that I don't consider the huge cash position as current asset but prepayments received as current liabilities?

Answer 1

http://pages.stern.nyu.edu/~adamodar/New_Home_Page/valquestions/noncashwc.htm

Answer 2

for the non constant growth-you take it as negative but when you reach the constant growth phase you need to set it to zero because you can't benefit from NWC forever as a source of financing

Answer 3

The company I work for has since its foundation always negative WC because of the prepayments received. So this should also be the case in the constant growth phase.

Answer 4

WC = Water Closet (bathroom)

Answer 5

You are really funny jake