Year-on-year growth rate of working capital
factor.formula
YoY Working Capital Growth Rate:
Among them, working capital (WC) is approximately equal to:
The meaning of each parameter in the formula is as follows:
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Working capital for the most recent reporting period (period t).
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Working capital in the same period of the previous year (period t-1).
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Total current assets, including but not limited to: cash and cash equivalents, trading financial assets, accounts receivable, receivables financing, prepayments, other receivables, inventory, etc.
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Monetary funds include cash, bank deposits and other highly liquid short-term investments that have a short term, are easily converted into cash and have a low risk of value changes.
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The total amount of current liabilities includes short-term loans, accounts payable, advances received, employee salaries payable, taxes payable, and non-current liabilities due within one year.
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Notes payable are commercial bills issued and accepted by enterprises in business activities such as purchasing raw materials, goods or receiving service supply, including bank acceptance bills and commercial acceptance bills.
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Non-current liabilities due within one year refer to non-current liabilities with a maturity date within one year or one operating cycle (whichever is longer), such as long-term loans due within one year and bonds payable due within one year.
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The absolute value function is used to ensure that the denominator is positive and avoid division by zero.
factor.explanation
The year-on-year growth rate of working capital is an important indicator to measure the changes in the operating efficiency and liquidity of an enterprise. A positive value may indicate an increase in the company's investment in operating assets, but it may also bring liquidity pressure; a negative value may indicate an improvement in the company's operating efficiency and the release of liquidity. This indicator needs to be comprehensively analyzed in combination with the company's business model, industry characteristics and macroeconomic environment. When conducting quantitative analysis, it can be combined with other financial indicators (such as inventory turnover, accounts receivable turnover, current ratio, etc.) to more comprehensively assess the financial health of the company. In addition, when constructing a multi-factor model, the factor is usually appropriately devalued and standardized to improve the robustness and effectiveness of the model.