To go from PAT to CFO, you need to add/subtract working capital (WC) changes.
If WC change is positive, you need to subtract that number from PAT.
If WC change is negative, you need to add those changes to PAT. Thus CFO>PAT.
Usually, if WC changes are negative from the past year to current year it's a good thing because it means company operations are not holding up cash. For example, when the company can collect receivables from customers faster than last year.
If WC change is positive, you need to subtract that number from PAT.
If WC change is negative, you need to add those changes to PAT. Thus CFO>PAT.
Usually, if WC changes are negative from the past year to current year it's a good thing because it means company operations are not holding up cash. For example, when the company can collect receivables from customers faster than last year.