Glossary
With over 200 terms in both English and French, our M&A Dictionary is designed to help you better understand the key words and concepts related to the sale oe purchase of a business in Canada.
« Back to Glossary Index
Working Capital
« Back to Glossary IndexCategory: Business Valuation
Working capital refers to a company’s short-term assets (e.g., cash, inventory, accounts receivable) minus its short-term liabilities (e.g., accounts payable, short-term debt). In mergers and acquisitions (M&A), working capital is crucial as it reflects a firm’s liquidity and operational efficiency. Buyers assess working capital to understand the financial health and operational needs of the target company. A careful analysis ensures that the acquired business has sufficient resources to maintain daily operations. Negotiations often involve determining an appropriate level of working capital to be included in the transaction, ensuring a smooth transition and avoiding financial disruptions post-acquisition.
« Back to Glossary IndexFrench Translation: