Working-Capital Adjustment
Short definition
A working-capital adjustment puts the gap between closing NWC and an agreed target into the price. It stops the seller leaving after destocking and not collecting.
Detailed explanation
The target is a normalised cycle (season, growth). The definition — inventory, receivables, trade payables — with or without provisions and cash — is the fight.
A locked box locks NWC and protects it with a no-leakage rule. Completion accounts measure at close and create a cash surprise.
Why it matters for the CFO
If the target is set low, the buyer refills NWC with own cash after close. That is a hidden price rise.
How it is calculated
Fiyat ± (kapanış NWC − hedef NWC)
Variables in the formula
- NWC*: target working capital in the contract
How to read it
A single month-end target misleads a seasonal business. An average or a seasonal index is required.
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What to learn next
Definitions are educational. They are not investment, credit or tax advice.