Is Total Net Working Capital or Incremental Net Working Capital

question 60

Essay

Is total net working capital or incremental net working capital more relevant for calculation of free cash flow?

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Definitions:

Divisor

A number by which another number is divided in mathematics, or a variable in an index that is used to maintain its continuity.

Securities Holdings

All the investments held by an individual or institution, including stocks, bonds, mutual funds, and other types of securities.

Reverse Repurchase Agreement

A financial transaction in which one party sells an asset to another party with a promise to repurchase it at a later date at an agreed upon price.

Repurchase Agreement

A repurchase agreement, or repo, is a short-term borrowing for dealers in government securities wherein the dealer sells the government securities to investors, usually on an overnight basis, and buys them back the following day.