Working Capital Analysis from the Balance Sheet
Understand receivables, inventory, payables and cash cycles.
Understand receivables, inventory, payables and cash cycles. Use the sections below to understand the practical decisions, records and compliance points before taking action.
Map the operating cycle
Connect customer credit, inventory holding, supplier terms and cash conversion.
Review receivable ageing
Separate current, overdue, disputed and potentially impaired balances.
Test inventory quality
Review count, valuation, slow-moving, obsolete and consignment items.
Analyse payables
Reconcile supplier statements and distinguish due, disputed and unrecorded liabilities.
Explain cash pressure
Profit and cash differ when working-capital balances expand or contract.
Track repeatable metrics
Use consistent ageing, turnover and cash-cycle measures across periods.
Official References
Rules and portal requirements can change. Review the current official material relevant to the proposed company.
This article provides general information and is not a substitute for legal, tax or investment advice. Applicability should be reviewed for the proposed entity and current law.