Adeniran Samson Oluwafemi
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LearnForecasting

Forecasting Working Capital Without Guesswork

Drive receivables, inventory and payables from operating days, not from a percentage of revenue picked out of the air.

Adeniran Samson Oluwafemi; ; 1 min read

The Short Answer

[Two or three sentences.]

The Three Drivers

Working capital forecasts are most defensible when each line is tied to the activity that drives it:

  • Receivable Days: trade receivables ÷ revenue × 365
  • Inventory Days: inventory ÷ cost of sales × 365
  • Payable Days: trade payables ÷ cost of sales × 365

[Explain how to read each one, and what a change in each tells you about the business.]

Worked Example

Driver Historical Average Forecast Rationale
Receivable Days [x] [x] [x]
Inventory Days [x] [x] [x]
Payable Days [x] [x] [x]

Common Mistakes

  • [Mistake One]: [Explanation.]
  • [Mistake Two]: [Explanation.]

Key Points

[Short closing summary.]