Working Capital Is the Engine, Not the Scoreboard
Explain why cash stress usually starts in working capital before it shows up in profit.
A strong P&L can still hide a weak cash position. Working capital is operating timing Working capital measures whether near-term assets are arriving in time to cover near-term obligations. The calculation is current assets minus current liabilities, but the management question is simpler: how much cash is stuck between delivery and collection? When receivables climb, inventory sits longer, or prepayments go out faster than collections come in, the business consumes cash even while revenue grows. That is why fast growth often feels cash-hungry rather than comfortable. Profit and cash move on different clocks Revenue can be recognized before the cash…
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