标题: Working Capital assumptions - Management Case, Base Case [打印本页] 作者: SWASH 时间: 2011-10-11 14:15 标题: Working Capital assumptions - Management Case, Base Case
Hey guys,
I'm practicing some LBO modelling from a book.
In the working capital assumptions of a case study they have :
- Management Case : DSO = 65
- Base Case : DSO = 60,2
Can someone explain to me how that makes sense ?
A DSO of 60,2 is more optimistic than a DSO of 65 ( less cash trapped in A/R --> lower WC --> source of cash --> higher FCF ).
Am I on crack here ?作者: xilinx_altera 时间: 2011-10-11 14:21
I'm not 100% sure of the logic but I'll take a stab. Typically the management case is more optimisitc and has more aggressive growth assumptions than the base case. As the company grows quickly it may be harder to collect A/R or they may extend more favorable payment terms to capture additional business. I'm not sure if that's what they have in mind but it's just a guess. I'm more in your camp.作者: ninja1024 时间: 2011-10-11 14:26
Ok, that's a plausible theory, txs.
Didn't think of that. But in that case it would warrant a note in the book and there is none.
