The Corporate Soap-Opera "As the Cash Turns": Management of Working Capital and Potential External Financing Needs‪.‬

Executive Summary Many analysts have shifted their focus from a corporation's uncertain bottom line to the firm's potential cash flow as a means of ascertaining company value. This paper posits that firms have been emphasizing the days of the working capital cycle. A pool of 'found funds' exist as the company efficiently manages its current assets and liabilities. This paper also measures the potential external financing needed to meet the working capital requirements. If the costs associated with working capital accounts exceed the benefits of such items as the holding of specific inventory levels and/or the issuing of greater trade credit, the firm's future dependence on debt financing will be impacted.