Forecasting Cash Flow: Changes in Working Capital
Interactive

Forecasting Cash Flow: Changes in Working Capital

Intuition Publishing
Updated Sep 23, 2020

Changes in working capital items directly affect cash flow. An increase in receivables or inventory represents a use of cash flow., while an increase in payables represents a source of cash flow. Here we investigate the relationship between working capital and cash flow and examine some of the key working capital ratios used by analysts.