Hi Guys, I was wondering if the Net Working Capital is calculated correctly. It should be 5% of revenues - in 2022e we have like ~4mio revenues which schould give the something around ~200k Net Working Capital. However, the table comes up with much lower values. I am doing something wrong here? BR
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Is the Net working capital correct?
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Hi,
A great lesson in listening/reading carefully!
The prompt says "the client is interested in how much money he has left at the end of the year for investments"
So, you should be doing your calculations for 2019, not 2022
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Could you please explain the calculations then? I cannot get there.
Hello! Here is my explanation, I hope it helps: The text states that the required NWC is 5% of revenues. Thus, as stated above, if the revenue is 4.284.000 € in 2022, the required NWC is 214.200 €. However, the companyalready had a required NWC of 71.400 € in 2021 (5% of 1.428.000 €). The table highlightes the delta of these two numbers, thus: 214.200 (NWC required in 2022) - 71.400 (NWC which the company already had in 2021) = 142.800 €. Hope this helps :)