STUCK ON FORECASTING FUTURE WORKING CAPITAL

I'm building out my financial model, using the Stanford Sample Search Fund Financials (exhibit 12) as a guide, and I'm stuck on forecasting changes in net working cap. Stanford's model is using 20% of annual revenue growth as the delta of working capital, so for a growing company this would be a signficant drain on available cash to pay down debt or distribute early to investors, and is crushing my model for a services business that has minimal capital or inventory requirements. I looked over the company's balance sheet and they grew $4m in revenue between 2018 and 2020, and the cumulative change in Net WC was a positive $200k. Is 20% of revenue growth way too conservative? Any advice on how you are modeling this for your deals?



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