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Lecture Learning Objectives
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Course Sections
1
Net Working Capital Concepts
Understanding operating cycles and NWC components
- What is working capital and why it matters
- Operating cycle vs. cash conversion cycle
- DSO, DIO, DPO calculations
- Industry benchmarks and interpretation
2
Working Capital Forecasting
Methods to project NWC requirements
- Percentage of sales method
- Days-based method (recommended)
- Setting DSO, DIO, DPO assumptions
- Calculating Change in NWC
3
CAPEX & Depreciation Schedules
Capital expenditures and depreciation methods
- Maintenance vs. Growth Capex
- Capex forecasting approaches
- Straight-line depreciation
- Using Excel SLN function
4
PP&E Roll-Forward Schedule
Tracking fixed assets over time
- Gross PP&E roll-forward equation
- Accumulated depreciation tracking
- Net PP&E calculation
- Quality checks and error prevention
5
Three-Statement Integration
Linking NWC and Capex to all statements
- How NWC affects IS, BS, CF
- Depreciation linking across statements
- Model structure best practices
- Integration quality checks
๐ฅ Download Practice Files
Download these files to follow along with the hands-on exercises
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Key Formulas Quick Reference
Working Capital Metrics
DSO = (A/R รท Revenue) ร 365
DIO = (Inventory รท COGS) ร 365
DPO = (A/P รท COGS) ร 365
CCC = DSO + DIO - DPO
DIO = (Inventory รท COGS) ร 365
DPO = (A/P รท COGS) ร 365
CCC = DSO + DIO - DPO
NWC Forecasting
A/R = (DSO / 365) ร Revenue
Inventory = (DIO / 365) ร COGS
A/P = (DPO / 365) ร COGS
ฮ NWC = Beginning NWC - Ending NWC
Inventory = (DIO / 365) ร COGS
A/P = (DPO / 365) ร COGS
ฮ NWC = Beginning NWC - Ending NWC
Depreciation
Annual Depr. = (Cost - Salvage) / Life
Excel: =SLN(cost, salvage, life)
Excel: =SLN(cost, salvage, life)
PP&E Roll-Forward
End Gross PP&E = Beg + Capex - Disposals
End Accum Depr = Beg + Depr - Disp Depr
Net PP&E = Gross - Accum Depr
End Accum Depr = Beg + Depr - Disp Depr
Net PP&E = Gross - Accum Depr
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