Working-Capital Drag
Short definition
Working-capital drag is receivables and inventory tying up more cash than supplier credit when sales grow. EBITDA can rise while free cash flow turns negative.
Detailed explanation
Even with days unchanged, higher turnover enlarges NWC. Inflation and FX inflate the amount with days held constant. Overtrading is funding that drag with debt.
Factoring and longer dates change who carries the drag; they do not delete it. The illusion is treating profitable growth as cash.
Why it matters for the CFO
This is the classic Turkish cash-squeeze channel: season, inflation and growth demand NWC together.
How it is calculated
NWC sürüklemesi ≈ Δsatış × (DSO + DIO − DPO) / 365 × maliyet çarpanı
Days × the rise in daily sales (or COGS) is a coarse ΔNWC. FX and price shocks move the amount even if days are fixed.
Variables in the formula
- Δsatış: sales increase
How to read it
Drag / ΔEBITDA is how cash-inefficient growth is. Volume without better days eats FCF.
Numerical example
Sales +36 mn TL/year, DSO 60, DIO 45, DPO 30: net 75 days. Roughly +36 × 75/365 ≈ 7.4 mn TL extra NWC (before mix and VAT).
Related calculators
Güven Sayılgan’s writing on this topic
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What to learn next
Definitions are educational. They are not investment, credit or tax advice.