CFO & Strategy
Working Capital Management for Startups
Collated by Harry Prabandham
Curated by Rubric Financial
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Working Capital Fundamentals
- Working capital = current assets (cash, receivables, inventory) minus current liabilities (payables, accrued expenses, deferred revenue)
- Positive working capital means you can cover short-term obligations; negative working capital isn't always bad if driven by deferred revenue (common in SaaS)
- Cash Conversion Cycle (CCC) = Days Sales Outstanding + Days Inventory Outstanding - Days Payable Outstanding; lower is better
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