Mary sees you pass by her office the next day and waves you in to talk.
“Good morning,” she says. “I need you to write some content for a report I’m preparing. I could do it myself, but I can’t get to it before I have to leave town on business. This piece of the report is fairly straightforward. Given your expertise, I think you’ll do a good job with it.”
“Sure,” you say. “Whatever I can do to help.”
“Okay, good,” she says. “This report is for potential investors. The section I want you to write is about net working capital. I'd like you to explain what net working capital is and provide an equation that can be used to compute it. Then follow that up by computing the net working capital for Apex, using the same balance sheets you have for the PowerPoint presentation you’re working on. Make sure to describe the trend.”
“I think I understand what you want,” you say. “It will be important to show whether the trend is improving, deteriorating, or moderating. Obviously, we want to demonstrate our need for external capital. However, another objective is to make the investor aware of the components of net working capital, and how the components have changed over the last 2 years. Right?”