@dd1474
I am happy we are engaging in a good constructive discussion here. Do not look at CFO in isolation but look at it before and after WC changes and find out what constitutes it - for eg., in company A's case if there was a build up of FG and it translated into sales (next year there was a decrease or very small increase), then the company was on the right path in stuffing the channel sensing a growth opportunity.
However, a relentless increase in FG over 2-3 years is a flag and similarly so with RM inventroy and WIP inventory. I spend time trying to visualize what the promoter would be saying by drawing a mental tree in my mind and see if the numbers fit in. for eg., increase in FG for a year means bullish times ahead. Increase in FG for two years ahead of sales growth means an amber flag - for three years is a red flag.
and aman's point is valid about interest expense getting added to CFO to give an artificially high figure. The CFO I use is "owner's earnings" - EBITDA adjusted for WC plus maintenance capex. The issue with CP is the adjustment for WC, which is relentless across years.
