Working Capital Requirement Calculator

How the working capital requirement calculator works

The model assumes stable daily activity. Credit receivables equal period sales × credit-sale share ÷ reference days × collection days. Inventory equals period COGS ÷ reference days × inventory days. Supplier credit equals period credit purchases ÷ reference days × payable days. Purchases and COGS are entered separately because the appropriate cost bases can differ.

Each modeled balance rounds half-up to cents. Net operating capital is receivables plus inventory less supplier credit. Adding the desired minimum cash gives the modeled funding requirement; additional funding is the positive amount above the funding already assigned. These are projected operating balances, rather than current-ratio calculations from a balance sheet.

Negative net operating capital remains visible when supplier credit exceeds modeled operating assets. It is not an instruction to withdraw cash or extend payment dates. The model excludes growth ramps, seasonality, taxes, other current assets and liabilities, bad debt, restrictions and dated receipts. Review assumptions against the actual operating cycle rather than interpreting this as a financing commitment.

Worked example

Sales of 365,000 with 80% on credit over 365 days give 800 daily credit sales; 30 collection days imply 24,000 receivables. COGS of 219,000 gives 600 per day and 27,000 inventory at 45 days. Credit purchases of 182,500 give 500 per day and 17,500 payables at 35 days. Net operating capital is 33,500; adding 10,000 cash gives 43,500 required, or 28,500 above 15,000 existing funding. At 40 collection days the requirement becomes 51,500.

Sources and assumptions

The source material explains the underlying calculation or pricing structure. Entered prices, costs, schedules and scenario choices are your assumptions; this tool does not obtain supplier quotes or predict actual results.

• CFI: working-capital components and formula