Seller/Company Credit Cards and Working Capital Adjustment Questions

November 07, 2023
by a searcher from University of California, Los Angeles - UCLA Anderson School of Management in Wellington, FL, USA
Hi all,
I've seen several deals where sellers have credit cards on their balance sheets. Are these typically adjusted as part of the working capital calculation on a transaction? To me it seems like it would be a debt-like item but certainly arguments can be made against that.
Thanks
from Missouri University of Science and Technology in Perth WA, Australia
I would scrutinise the historic use if you can see a pattern. If it’s being used to support a sales rep travelling, then it’s likely for ease of transacting and not necessarily a source of credit for the company.
Ensure it’s considered in the working capital figure in any case.
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA