What would be some common NWC adjustments when asked during an interview?

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AR normalization

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Definitional items would be cash and cash equivalent, financing related items such as line of credit, and accrued interest.

Diligence adjustments include non-operating, nonrecurring, and accounting methodology-related/normalizing items. Also depends if the Company has all accruals in place, otherwise items such as proposing the monthly accrual for payroll, vacation or bonuses are typical. Other items could by Capex in AP, A/R or A/P normalization.

Depending on the Company there could be various onetime items such as employee loan receivables, adjusting for payment terms, inventory adjustments, etc. etc.

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I agree with Analyst 1, plus you can find definitional adjustment items within the Trial Balance. Diligence adjustments are the ones that are identified during the course of the diligence process, they may include some assumptions.

Cash, current portion of long-term debt, earn-out liability, current portion of pension obligations, etc.

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