Harvard Business Review Guides Ultimate Boxed Set (16 Books)

What’s Your Working Capital Model? A Case Study

by John Mullins and Randy Komisar

Imagine a working capital model where your customers pay you before your product or service is even produced, not to mention delivered. A good idea, right? Consider the subscription-based periodical publishing industry. From the bare-bones Kiplinger Letter (a subscription-based personal finance newsletter) to the complex workings of the New York Times, companies in the periodicals industry historically have had negative working capital.

Why is this? Periodicals publishers—whether they publish newsletters, newspapers, or magazines—tend to have almost no inventory, just some paper and ink. As soon as they print the current edition, out it goes. On the other hand, ...