If a rent payment isn't due in 24 months, wouldn't that be a non-current liability? Why would it count toward current liabilities rather than non-current?
hi, I can't find the same formula on each video : I tried to compute the NWC of Apple for 2023 FY : CA - CL = 143,566M - 145,308M = -1,742M. Does it write ? Is there other ways to compute it ? Thanks.
In short, that's correct. If a company with a negative NWC balance has an increase in that negative balance from one period to the next, it will result in an inflow of cash to the company.
Cool video, thanks for sharing. In the case of tech M&A, how would you deal with deferred revenue in the context of working capital adjustments? I assume the seller would wants DRs to be part of the WC instead of being counted as a loabolit66so that it is not a $ for $ offset against the valuation. Am I correct? Would all the DRs be included or some would be excluded from WC adjustments? (1 year prepaid vs multi year prepaid deals for instance). Thank you
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Hey there, sorry for the delay. In short, the typical way that this concept is utilized by small business is via pre-payments. For example, starting a subscription service where customers pay in advance. You see this a lot with small Software businesses. Hope that helps!