Startup Terms Glossary
What is a Working Capital Adjustment?
Sometimes, when a business is sold, there is a difference in the available working capital and the capital needed to continue day-to-day business. When this happens, an adjustment to the working capital must be made. The idea behind this is that any time a company is sold, the buyer must have adequate working capital to continue to run the business. If not enough working capital is present, sellers must use a working capital adjustment to inject more funds into the business.
Working Capital Adjustment Examples
Examples of working capital adjustment:
- Example 1. Defined as working assets minus working expenses
- Example 2. A judge or arbitrator can be consulted to settle disputes
Here’s another web page about working capital adjustment.
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