NWC
Net Working Capital
Short definition
Net working capital is current assets minus current liabilities. In valuation and ROIC, cash and financial debt are stripped out to operating NWC; otherwise net debt is double-counted.
Detailed explanation
In SPA, target NWC is a normalised operating balance; cash, financial debt, dividend accruals and tax payable are often out. Deviation from target NWC at closing becomes a price adjustment.
In DCF the cash effect each year is ΔNWC. A high but stable NWC does not consume extra cash; growth turns ΔNWC into an outflow.
Why it matters for the CFO
M&A price, working-capital facilities and FCFF need one definition. A silent change in definition breaks both the purchase price and leverage covenants.
How it is calculated
NWC = Dönen varlıklar − Kısa vadeli yükümlülükler (değerlemede sıklıkla kasa ve finansal borç hariç)
Variables in the formula
- NWC: Net working capital
How to read it
NWC / sales shows how cash-intensive growth is. Sales up with a stable ratio still consumes cash. There is no universal “healthy NWC”; read it with CCC and margin.
Numerical example
Trade receivables 80, inventory 70, trade payables 40 mn TL → operating NWC = 80 + 70 − 40 = 110 mn TL.
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What to learn next
Definitions are educational. They are not investment, credit or tax advice.