Working Capital

The Working Capital Fundamental Analysis lookup allows you to check this and other indicators for any equity instrument. You can also select from a set of available indicators by clicking on the link to the right. Please note, this module does not cover all equities due to inconsistencies in global equity categorizations. Please continue to Equity Screeners to view more equity screening tools.
  
Working Capital can be positive or negative, depending on how much of current debt the company is carrying on its balance sheet. In general terms, companies that have a lot of working capital will experience more growth in the near future since they can expand and improve their operations using existing resources. On the other hand, companies with small or negative working capital may lack the funds necessary for growth or future operation. Working Capital also shows if the company has sufficient liquid resources to satisfy short-term liabilities and operational expenses.

Working Capital

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Current Assets

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Current Liabilities

Working Capital is a measure of company efficiency and operating liquidity. The working capital is usually calculated by subtracting Current Liabilities from Current Assets. It is an important indicator of the firm ability to continue its normal operations without additional debt obligations. .

Working Capital In A Nutshell

Typically you want to see a company have a higher working capital number because that means the liabilities are not weighing the company down as much as it could. There are many avenues you can take this particular number and equations, so let us pick it apart and find what you may want to be looking for.

Working capital is the current assets minus the current liabilities, and this number can be both positive or negative depending on the numbers populated in the equations. It is important to understand what goes into these types of formulas because you can then begin to pick it apart and pinpoint what causes the final number and that can potentially unearth different issues with a company.

Closer Look at Working Capital

First are current assets and an asset is anything the company is using to generate revenue or house the business. Assets are the same across some industries, but typically they differ from company to company. A manufacturing firm will have different assets compared to a start up in Silicon Valley. When researching the assets, you want to know if they are in good working order and could potentially be liquidated in the event of a bankruptcy or financial distress.

Second are current liabilities and this encompasses the debt in a company, both long term and short term. If you look at debt, you want to understand why the debt is there in the first place. A reason could be the company is growing a needed the funds to purchase more assets and that is an acceptable answer. What you do not want is the company getting loans to pay off existing debt holders because that can signal a cash flow problem, which could ultimately bring down the business.

Bringing it all together, you want the working capital number to be as large as possible really, because that indicates there is little to no debt on the books and cash flow should not be an issue. However, it may be uncommon to find a business with no debt as many large companies have it for several of reasons. Be sure to fully understand the company’s intent and then move forward from there. If you get stuck, reach out to an investing and trading community as they can give you ideas on how to implement these numbers and gear it towards your current setup. If all else fails, reach out to an investing professional and they should be able to help you out. Working capital will be in almost all financial reports and should be in your toolbox.

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Pair Trading with Investor Education

One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Investor Education position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Investor Education will appreciate offsetting losses from the drop in the long position's value.
The ability to find closely correlated positions to Boston Scientific could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Boston Scientific when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Boston Scientific - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Boston Scientific Corp to buy it.
The correlation of Boston Scientific is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Boston Scientific moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Boston Scientific Corp moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Boston Scientific can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.
Pair CorrelationCorrelation Matching
Check out Investing Opportunities to better understand how to build diversified portfolios. Also, note that the market value of any private could be closely tied with the direction of predictive economic indicators such as signals in estimate.
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