Working capital intensity

Working capital intensity is net working capital divided by revenue. It answers one question: how much money must the business leave sitting in the operating cycle for every euro of sales it makes?

Its value in a forecast is as a check rather than as an assumption. If the day assumptions are held flat, intensity is flat by construction, so a forecast where intensity drifts down year after year is a forecast where working capital is quietly melting away. That drift is far easier to see in one percentage than in three separate balances moving at once.

It also makes the funding cost of growth visible in a single step. A business at 15% intensity adding 100 of revenue needs 15 of cash before it earns anything at all on the extra sales, which is the clearest explanation of why a fast growing, profitable company can still need a facility.

Across sectors the level ranges from strongly negative to very high, and the level by itself carries no judgement. What matters is whether the level in the forecast is one the company has actually run at, or one that appeared because somebody moved an assumption without saying so.