Acquiror AI

Working capital and the peg

Set the peg from the trend the business actually runs on.

Track the cash cycle across periods, analyze receivables and inventory, model closing adjustments, and arrive at a peg you can defend in the purchase agreement.

The Working Capital screen for a demonstration deal: latest and average working capital, the selected peg, and six monthly periods with revenue, receivables, inventory, payables, working capital as a share of revenue, and DSO, DIO, DPO and the cash conversion cycle for each.
A demonstration deal. Figures as the product shows them.
  1. DSO, DIO, DPO and the cash conversion cycle, each on the period's own day count
  2. The selected peg, with its method recorded

Why it matters

In a transaction, working capital is delivered at close against a negotiated peg, and variances move the purchase price after you have agreed it. Understanding the trend sets the right expectation and finds the problem before closing.

What you do in it

  • Periods. Monthly, quarterly, annual, trailing-twelve-month or custom-dated snapshots with revenue, COGS and the balance-sheet lines.
  • Cash cycle. DSO, DIO, DPO and the cash conversion cycle per period, each computed on the period's own day count, never annualized by accident. A figure that cannot be computed shows a dash, never a zero.
  • Receivables. Import an AR aging, see health and concentration, track the findings and retract dismissed ones with their snapshot.
  • Inventory. Composition, turnover and a reserve override, with a tie-out warning when the balance sheet does not balance.
  • Peg scenarios. Model more than one peg, pick the one you will negotiate on, and the method is recorded with it.
  • Closing adjustments. Simulate what the price does if delivered working capital lands above or below the peg.
  • Risks. Identify and manage findings with severity.
The cash cycle for December 2025 on the demonstration deal DIO 43.2 + DSO 57.2 − DPO 55.7 = CCC 44.8 days 020406080100 days Inventory held, 43.2 days (DIO) Receivables outstanding, 57.2 days (DSO) Payables outstanding, 55.7 days (DPO) Cash conversion cycle, 44.8 days (CCC) suppliers are paid customers pay The cash cycle for December 2025 on the demonstration deal DIO 43.2 + DSO 57.2 − DPO 55.7= CCC 44.8 days 0255075100 days Inventory held, 43.2 days (DIO) Receivables outstanding, 57.2 days (DSO) Payables outstanding, 55.7 days (DPO) Cash conversion cycle, 44.8 days (CCC)
Days from paying suppliers to collecting from customers: inventory days plus receivable days, less payable days. Figures as the product shows them for the demonstration deal's period ended 31 December 2025, each computed on that period's own day count.

How it connects

Unlocks once financials are extracted. A valuation's equity bridge takes its working-capital adjustment from here as an estimate: the most recent period's working capital less the selected peg. An analyst's override always wins.

What comes out of it

A selected peg with its method recorded, a closing-adjustment simulation above and below it, and the memo's working capital section: the peg, the trends and the purchase-price adjustment.

Delivered working capital is read against the peg

Delivered working capital is read against the peg Monthly working capital, 2025: CAD 398,000 to 471,000Delivered below the peg: the price comes down by the shortfallDelivered above the peg: the price goes up by the excess 380k410k440k470k500k Selected peg, CAD 432,000
The peg and the range are the demonstration deal's, as the product shows them. The direction of the adjustment is the method; the purchase agreement sets the amount per dollar of variance, and any collar.

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