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Intermediate

Understanding Working Capital and Its Impact on Business Health

A practical, investor-side guide to working capital, built for experienced retail investors, mutual fund investors, and salaried professionals who already know how to read a balance sheet and want to know what the receivables, inventory, and payables lines are actually telling them. Learn to locate working capital on a balance sheet, calculate and interpret DSO, DIO, DPO, and the cash conversion cycle, read liquidity ratios as trend signals rather than pass or fail tests, and see why FMCG, IT, and capital goods companies carry completely different working capital profiles. Covers negative working capital businesses, the red flags that show up before a cash crunch does, and how to carry this lens into stock screening on Screener.in and into evaluating a mutual fund's underlying holdings, using real NSE and BSE listed companies throughout.

MODULES

6

DURATION

~3.3 hrs

TRACK

Stock Market Basics

Access Level

LEARNER

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Everything included

Full Text Playbooks

Actionable Exercises

Mobile Reading Mode

Lifetime Updates

Curriculum Breakdown

Chapter 1: Why Working Capital Matters to an Investor

3 Lessons

Working Capital Is Not Cash: What It Actually Measures8 min read

Current Assets and Current Liabilities: Locating Working Capital on the Balance Sheet9 min read

Working Capital vs Profit: Why a Profitable Company Can Still Run Out of Cash10 min read

Chapter 2: The Working Capital Cycle

4 Lessons

Days Sales Outstanding: How Long Customers Take to Pay9 min read

Days Inventory Outstanding: How Long Stock Sits Before It Sells9 min read

Days Payable Outstanding: How Long the Company Takes to Pay Its Suppliers8 min read

The Cash Conversion Cycle: Putting DSO, DIO, and DPO Together11 min read

Chapter 3: Liquidity Ratios and Business Health

3 Lessons

Current Ratio and Quick Ratio: What They Do and Don't Tell You9 min read

Working Capital as a Percentage of Sales: A Better Trend Signal9 min read

Net Working Capital Turnover: Measuring How Efficiently Capital Is Used10 min read

Chapter 4: Working Capital Across Sectors

3 Lessons

Negative Working Capital Businesses: Why Some Companies Run on Supplier Money11 min read

Capital-Intensive vs Asset-Light Businesses: Comparing Working Capital Needs10 min read

Case Study: Comparing Working Capital Across an FMCG, an IT, and a Capital Goods Company12 min read

Chapter 5: Spotting Red Flags in Working Capital

4 Lessons

Rising Receivables Faster Than Sales: An Early Warning Sign10 min read

Inventory Build-Up: Genuine Growth or Unsold Stock9 min read

Case Study: A Company Whose Working Capital Unravelled13 min read

Building Your Own Working Capital Red Flag Checklist9 min read

Chapter 6: Working Capital, Valuation, and Fund Selection

3 Lessons

How Working Capital Changes Feed Into Free Cash Flow10 min read

Working Capital Efficiency as a Stock Screening Filter on Screener.in11 min read

Applying This Lens When You Invest Through Mutual Funds10 min read