Working capital changes
AccountingDefinition
Changes in the operating short-term assets (AR, inventory) and liabilities (AP, accrued expenses) during a period. Affect operating cash flow directly: rising AR means revenue is booked but cash hasn't arrived yet.
Growing companies need more working capital → drains cash. Shrinking companies release working capital → boosts cash. Apple and Amazon famously run NEGATIVE working capital — suppliers fund them.
Growing companies need more working capital → drains cash. Shrinking companies release working capital → boosts cash. Apple and Amazon famously run NEGATIVE working capital — suppliers fund them.