E-commerce · Economics
Normalized working-capital requirement
Published · Reviewed by The Diligence Standard Team · Updated
The buyer needs sufficient inventory, receivables and operating cash support to reproduce the represented earnings.
Records to reconcile
- Monthly balance sheets
- Inventory and payable cycles
- Processor payout timing
Warning signal
The transaction assumes a cash-free business while essential operating balances are removed.
Transaction impact
Buyer funding needs rise immediately after closing.
Response
Establish a normalized peg and define included operating assets and liabilities.