## Working Capital Strategy Revisited

As levers of financial performance, none is more important than working capital. The viability of every business activity rests on daily changes in receivables, inventory, and payables …

As levers of financial performance, none is more important than working capital. The viability of every business activity rests on daily changes in receivables, inventory, and payables …

We know that forecasts based on average values are on average wrong. In addition will deterministic models miss the important uncertainty dimension that gives both the different risks facing the company and the opportunities they bring forth.

We know that forecasts based on average values are on average wrong. In addition deterministic models will miss the important dimension of uncertainty – that gives both the different risks facing the company and the opportunities they produce.

Traditionally, when estimating costs, project value, equity value or budgeting, one number is generated – a single point estimate.

Most companies have some sort of model describing the company’s operations. They are mostly used for budgeting, but in some cases also for forecasting cash flow and other important performance measures.

A good metric should have a low probability of rejecting a true hypothesis of bankruptcy (false positive) and a high probability of rejecting a false hypothesis of bankruptcy (false negative).

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