Net working capital

Research
1

I have a question on the WorkCap function. I’m looking to include the change in net working capital as part of a ranking system. The reference sheet for WorkCap says “Working capital is current assets less current liabilities.” This definition would include cash and short term investments, which I have never seen included in working capital before. Can someone confirm this?

So if I want the change in NWC over the TTM, I would have to use: (WorkCapQ - CashQ - InvestSTQ) - (WorkCapPYQ - CashPYQ - InvestSTPYQ). This seems overly complicated for a pretty common metric. The other way I can see to do it would be to add up the change in each component (there appear to be six) of NWC in the functions under Cash Flow Stmt/Operating.

Thanks, Travis

2

I tend to trust the CFI on questions like these. See Net Working Capital They say there are three different ways of calculating net working capital.

We also have a FactSet item, ff_wkcap_chg, which is coded as OtherWCChg because a previous database provider’s similar item was labeled like that (we should probably change its name). This item actually includes ALL changes in working capital: accounts payable, income taxes payable, other accruals, receivables, inventory, and other current assets and liabilities.