STEM help / Calculation framework

10.3.36.1 STEM 5.0 Working Capital

In STEM 5.0, Working Capital was calculated for each Service as a Base Level plus a proportion – the Ratio of Charge – of its Operating Charge. In effect, this was a debtors-only model. Cashflows were only calculated at the Network level and so there was just one global Initial Working Capital field.

When a STEM 5.0 model was upgraded (which happened automatically when it was loaded into STEM 5.3) the global 5.0 Initial Working Capital was moved to Initial Debtors for the first Service. The Base Level and Ratio of Charge inputs were retained for upwards compatibility, and the STEM 5.0 Working Capital, calculated from those inputs, was added into the Service Debtors result. The Average Creditor and Debtor Days inputs were set to zero – the usual default is 30 – so that the original results were preserved.

Note: It is recommended that you use Debtors/Creditors for all new models, and that existing models should be changed to this representation when convenient.

 

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