Working Capital definition: Copy, customize, and use instantly
Introduction
The term "Working Capital" refers to the difference between a company’s current assets and current liabilities, representing the liquidity available to meet short-term operational needs. It is a critical measure of financial health and operational efficiency.
Below are various examples of how "Working Capital" can be defined in different contexts. Copy the one that fits your needs, customize it, and use it in your contract.
Definition of "Working Capital" as current assets minus current liabilities
This definition ties "Working Capital" to a basic calculation.
"Working Capital" means the difference between the current assets and current liabilities of a company, calculated as current assets minus current liabilities.
Definition of "Working Capital" as a liquidity measure
This definition applies "Working Capital" to operational liquidity.
"Working Capital" refers to the amount of liquid resources available to a company to fund its day-to-day operations, calculated as current assets less current liabilities.
Definition of "Working Capital" as adjusted for specific items
This definition ties "Working Capital" to exclusions or adjustments.
"Working Capital" means the current assets minus current liabilities of a company, adjusted to exclude [insert specific items, e.g., cash, short-term debt, or non-operational liabilities].
Definition of "Working Capital" as defined for a specific transaction
This definition applies "Working Capital" to M&A or financing.
"Working Capital" refers to the financial metric defined in Section [insert section number] of this agreement, calculated as specified in the attached schedule or annex.
Definition of "Working Capital" as normalized for fluctuations
This definition ties "Working Capital" to adjusted averages.
"Working Capital" means the average current assets minus current liabilities over a defined period, normalized to account for seasonal or irregular fluctuations in operations.
Definition of "Working Capital" as net operating liquidity
This definition focuses on operational cash flow.
"Working Capital" refers to the liquidity available from operational activities, excluding cash, long-term liabilities, and other non-operational assets.
Definition of "Working Capital" as applicable to covenant compliance
This definition ties "Working Capital" to contractual obligations.
"Working Capital" means the financial metric used to assess compliance with covenants under this agreement, calculated in accordance with generally accepted accounting principles (GAAP) or international financial reporting standards (IFRS).
Definition of "Working Capital" as an indicator of short-term solvency
This definition applies "Working Capital" to solvency analysis.
"Working Capital" refers to the financial measure of a company’s ability to meet its short-term obligations, calculated as the difference between current assets and current liabilities.
Definition of "Working Capital" as pre-closing financial status
This definition ties "Working Capital" to pre-closing adjustments.
"Working Capital" means the financial position of a company as of the closing date, determined by calculating current assets minus current liabilities and subject to adjustments specified in this agreement.
Definition of "Working Capital" as inclusive of receivables and payables
This definition applies "Working Capital" to core business operations.
"Working Capital" refers to the sum of accounts receivable, inventory, and other current assets, less accounts payable and other current liabilities, as of the measurement date.
Definition of "Working Capital" as excluding non-operating assets
This definition focuses on operational assets only.
"Working Capital" means the difference between current assets and current liabilities, excluding non-operating assets such as marketable securities or investments unrelated to core operations.
Definition of "Working Capital" as defined for earnout calculations
This definition ties "Working Capital" to performance-based payouts.
"Working Capital" refers to the financial metric used to calculate earnouts or contingent payments, determined in accordance with the calculation method outlined in this agreement.
Definition of "Working Capital" as defined by contractually agreed adjustments
This definition applies "Working Capital" to customized calculations.
"Working Capital" means the financial metric determined by subtracting current liabilities from current assets, with adjustments for items specified in Exhibit [insert exhibit number].
Definition of "Working Capital" as measured at a specific date
This definition ties "Working Capital" to a point in time.
"Working Capital" refers to the current assets minus current liabilities of the company, measured as of [insert specific date or time period].
Definition of "Working Capital" as a measure of efficiency
This definition connects "Working Capital" to operational performance.
"Working Capital" means the measure of a company’s operational efficiency, calculated as current assets less current liabilities, and used to assess its ability to generate cash flow.
Definition of "Working Capital" as subject to post-closing adjustments
This definition applies "Working Capital" to transactional adjustments.
"Working Capital" refers to the net current assets of the company as of the closing date, subject to adjustments for discrepancies identified during the post-closing reconciliation process.
Definition of "Working Capital" as linked to specific industries
This definition ties "Working Capital" to industry norms.
"Working Capital" means the financial metric used to evaluate liquidity and operational health, calculated in a manner consistent with industry standards for [insert specific industry].
Definition of "Working Capital" as calculated under IFRS standards
This definition applies "Working Capital" to international reporting.
"Working Capital" refers to the current assets minus current liabilities, calculated in accordance with International Financial Reporting Standards (IFRS) applicable to this agreement.
Definition of "Working Capital" as excluding disputed receivables
This definition ties "Working Capital" to uncontested assets.
"Working Capital" means the net current assets of the company, excluding any accounts receivable subject to dispute or litigation as of the measurement date.
Definition of "Working Capital" as measured on a rolling basis
This definition applies "Working Capital" to ongoing evaluation.
"Working Capital" refers to the average current assets minus current liabilities calculated over a rolling [insert period, e.g., 12-month] period to account for operational fluctuations.
Definition of "Working Capital" as used in financing agreements
This definition ties "Working Capital" to loan compliance.
"Working Capital" refers to the net current assets calculated to assess compliance with financial covenants under a loan or credit agreement, as defined in Section [insert section number].
Definition of "Working Capital" as adjusted for seasonal fluctuations
This definition applies "Working Capital" to seasonal industries.
"Working Capital" means the difference between current assets and current liabilities, adjusted to account for predictable seasonal variations in operations.
Definition of "Working Capital" as applicable to dividend calculations
This definition ties "Working Capital" to shareholder payouts.
"Working Capital" refers to the financial metric used to determine the availability of funds for dividend declarations, calculated in accordance with the company’s dividend policy.
Definition of "Working Capital" as excluding intercompany balances
This definition applies "Working Capital" to external operations.
"Working Capital" means the current assets minus current liabilities, excluding intercompany receivables and payables for purposes of external financial reporting.
Definition of "Working Capital" as a metric for cash flow analysis
This definition ties "Working Capital" to cash flow monitoring.
"Working Capital" refers to the financial measure used to evaluate short-term cash flow, calculated as the difference between current assets and liabilities directly related to operations.
Definition of "Working Capital" as subject to dispute resolution
This definition applies "Working Capital" to contested adjustments.
"Working Capital" means the net current assets of the company, with any adjustments subject to resolution under the dispute resolution procedures outlined in this agreement.
Definition of "Working Capital" as reflective of inventory cycles
This definition ties "Working Capital" to inventory levels.
"Working Capital" refers to the financial metric calculated by including accounts receivable, inventory, and cash, minus accounts payable, with a focus on aligning with inventory cycles.
Definition of "Working Capital" as excluding prepaid expenses
This definition applies "Working Capital" to specific asset exclusions.
"Working Capital" means the current assets minus current liabilities, excluding prepaid expenses and other non-liquid assets.
Definition of "Working Capital" as a liquidity buffer
This definition ties "Working Capital" to financial stability.
"Working Capital" refers to the financial cushion available to absorb short-term financial shocks, calculated as current assets minus current liabilities with adjustments for contingencies.
Definition of "Working Capital" as linked to deferred revenue
This definition applies "Working Capital" to revenue recognition.
"Working Capital" means the difference between current assets and current liabilities, adjusted to account for deferred revenue or unearned income as liabilities.
Definition of "Working Capital" as excluding tax-related assets
This definition ties "Working Capital" to non-tax metrics.
"Working Capital" refers to the difference between current assets and liabilities, excluding tax-related assets such as deferred tax benefits or receivables.
Definition of "Working Capital" as part of working capital loans
This definition applies "Working Capital" to short-term financing.
"Working Capital" means the financial metric used to determine the eligibility and size of working capital loans, calculated as the net current assets of the borrower.
Definition of "Working Capital" as linked to forecasted operations
This definition ties "Working Capital" to operational projections.
"Working Capital" refers to the expected difference between forecasted current assets and liabilities, based on operational and financial projections for the reporting period.
Definition of "Working Capital" as a benchmark for performance bonuses
This definition applies "Working Capital" to incentive programs.
"Working Capital" means the financial metric used as a benchmark for determining performance-based bonuses or incentives, calculated in accordance with the terms of this agreement.
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