Do you typically include customer deposits in adjusted NWC? Like deposits from customers recorded as a current liability? Also I’ve heard mixed opinions on notes receivable being kept in adj NWC…Any thoughts on both topics?

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Customer deposits

Sell-side: leave in (but a buy side team will likely exclude)
Buy-side: pull out and place either the entire balance or cost of servicing that deferred revenue on debt (depends on client/industry/deal negotiations)

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Customer deposits are debt. Notes receivable usually are related party or just other random garbage and should get taken out.

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It depends 🤣

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