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Litigated Business Valuation Services
Active Passive Appreciation – Causation

Active Passive Appreciation – Causation

The business appraiser performing an active passive appreciation analysis looks to their engaging legal counsel to define and interpret state law in the particular jurisdiction. An active passive analysis is performed when state divorce law requires a determination of...

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Working Capital Changes in a Free Cash Flow Forecast– Part III

Working Capital Changes in a Free Cash Flow Forecast– Part III

Part II of my working capital blog identified methods often used by business appraisers when forecasting working capital. In this installment, I will present some additional thoughts regarding this topic. Depending on the facts and circumstances, it is typically appropriate to consider the company’s historical working capital ratios and industry working capital metrics at the composite level (e.g. total working capital), as well as each separate component of working capital (e.g. accounts receivable, inventory, accounts payable, etc.).

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Working Capital Changes in a Free Cash Flow Forecast– Part II

Working Capital Changes in a Free Cash Flow Forecast– Part II

Part I of my working capital related blog addressed the impact on free cash flow of changes in current assets and changes in current liabilities, which are the two components that comprise working capital (calculated as current assets minus current liabilities). The combined impact of changes in current assets and changes in current liabilities equals the impact of changes in working capital on free cash flow. Part II of this blog identifies methods often used by business appraisers when forecasting working capital.

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