The Working Capital Peg & Why It’s Permanent

Heather Endresen shows the actual math behind a normalized working capital peg: days in the cash conversion cycle multiplied by the daily cost of running the business. She explains why that math is usually wrong until a quality of earnings provider cleans up the books, and why this capital is permanent. It gets consumed every cycle and grows with the business, so think of it the way you would think of equipment, not a one time expense.