where: ΔWCt = Working capital in year t less working capital in year (t − 1); CFt − 1 = Cash flows from operations received/disbursed relating to events in the previous period; CFt = Cash flows from operations received/disbursed relating to events in the current period; CFt + 1 = Cash flows from operations received/disbursed relating to events in the future period; ΔSALESt = Sales in year t less sales in year (t − 1); PPEt = Level of gross property, plant and equipment at year t; and εt = The error term in year t.