In an economic environment where supply shocks and inflation are either not risks or pressing concerns, changes in net working capital receive limited attention. However, where supply shocks and or inflation are real risks, analysts must reassess traditional views to understand net working capital is fluctuating and what strategy management is espousing, along with the risks those strategies bring. In this article, the author invites readers to reassess their views on the implications of changes in net working capital. To answer this question, a brief review is helpful. Working capital (total current assets – total current liabilities) is an accounting…
