Apple's working capital — reading a negative number

mentor: Working capitalDefinitionWorking capitalCurrent assets minus current liabilities — the cash tied up in running the business day to day. Its change is a line of the free-cash-flow walk: growth in receivables and inventory absorbs cash; stretching payables releases it.Working capital = Current assets − Current liabilities Cash conversion cycle = DSO + DIO − DPODrivers: Receivables (DSO) · Inventory (DIO) · Payables (DPO)Full definition → is current assets minus current liabilities — what a company owns short-term against what it owes short-term. The number can be negative, and reading it mechanically is the skill.

Below are Apple's own figures from its latest annual reportDefinitionForm 10-KThe audited annual report a US public company files with the SEC — the most complete single document about a business: audited financial statements, management's discussion, risk factors, and the auditor's own opinion. It is the primary source nearly every figure on Echelon grounds to.One 10-K = audited statements + MD&A + risk factors + auditor's reportDrivers: Assurance · Cadence · Restated comparativesFull definition → (Form 10-K), via SEC EDGAR. Compute how far current assets go toward covering current liabilities.

Current-liability coverage = current assets ÷ current liabilities. Below one hundred per cent, working capitalDefinitionWorking capitalCurrent assets minus current liabilities — the cash tied up in running the business day to day. Its change is a line of the free-cash-flow walk: growth in receivables and inventory absorbs cash; stretching payables releases it.Working capital = Current assets − Current liabilities Cash conversion cycle = DSO + DIO − DPODrivers: Receivables (DSO) · Inventory (DIO) · Payables (DPO)Full definition → is negative.