financial modeling


2 Answer(s)


Working capital is a measure of how well financed a business is to meet its day to day operations.

It does not make much sense to calculate the conventional working capital for banks. This is because they will show disproportionately large liabilities and small assets.

Large liabilities are due to banks leveraging themselves to lend money to clients.

Other metrics such as quality of borrowers, net asset and liability balance are better indicators of a banks viability as a going concern.


In the absence of working capital, the best way to get an indication of FCF to Equity is the dividends. The dividends flow to the shareholders and can be measured and can be used to indicate free cash flow to equity.