ΔNWC
Change in NWC
Short definition
ΔNWC is the period-to-period change in net working capital. An increase is a cash outflow, a decrease an inflow. Valuation and CFADS use this change, not the stock of NWC.
Detailed explanation
AR and inventory increases and AP decreases raise ΔNWC. The opposite releases cash. If the definition (cash in/out, tax payable in/out) changes, ΔNWC and FCFF jump.
Terminal recovery of NWC is written as negative ΔNWC (inflow). In a growth year a positive ΔNWC can be structural; a one-off destock is not run-rate.
Why it matters for the CFO
It is the most often forgotten line in the EBITDA-to-cash bridge. A growth budget without ΔNWC inflates FCF and breaks the investment decision.
How it is calculated
ΔNWC = NWC(t) − NWC(t−1) (artış = nakit çıkışı)
Variables in the formula
- ΔNWC: Period-to-period change in NWC
How to read it
ΔNWC / Δsales is the cash intensity of growth. A high ratio is an overtrading candidate. There is no universal threshold; CCC and margin set it.
Numerical example
OWC 100 mn TL at year start, 130 mn TL at year end → ΔNWC = +30 mn TL (outflow). Deduct 30 mn TL in FCFF.
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Definitions are educational. They are not investment, credit or tax advice.