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Strategies & Market Trends : Value Investing
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To: Elroy who wrote (71442)10/28/2022 4:11:50 AM
From: A1111   of 78639
 
I read somewhere that growing companies generally will have bad working capital. That is expected when a company generates 20% growth QoQ revenue requiring more inventory (inventory increase = worsening FCF). WRK for example has negative working capital, but its cash from operations have offset the negative WC due to scale and maturity.

My question on valuation was not on this particular company, but on a general market of growing small cap companies where working capital have material affect on FCF.

With the business, it doesn't manufacture in China. It manufactures in the US. They import from eastern countries, so you could argue they are a distribution company as well as a manufacturing. This company is just a mere example.
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