Working Capital Needs Calculator

Your working capital is used to pay short-term obligations such as your accounts payable and buying inventory. If your working capital dips too low, you risk running out of cash. Even very profitable businesses can run into trouble if they lose the ability to meet their short-term obligations. The calculator assists you in determining working capital needs for the next year. Your working capital can support your daily running costs, fund larger projects, and can help you remain afloat even during tough economic times. If your working capital is too low which means that your business is barely getting by and has just enough capital to cover its short-term expenses then the calculator helps you in determining the working capital needs for the next year. However, if the business invests excess cash it can generate a higher rate of return increasing the product’s value. Working capital benefits needs calculator! So, how much working capital is needed? See, working capital is mostly needed when a business considers increasing its inventory and accounts receivables to grow its customer base and business revenues. Current assets associated with it are short-term in nature and can be converted quickly to cash, accounts receivables, and inventory. Current liabilities, which we consider as obligations come due within one year, especially when it comes to primary accounts payable and short-term debt. One may believe it or not, but working capital is often used wrongly while talking about the business’s financial needs, especially when it is your startup business. Like if a company is unable to bear the expenses of its manpower it is most likely called under-capitalized and if a company is dealing with losses in the very first year then most likely “equity” is what we need, but some crazy one relates it with working capital. It’s another thing that the money used to fund growth for short term assets like inventory and account receivables can be correctly called “working capital” financing. So, how much working capital is needed? See, before answering this question it is a must for you to understand one basic thing how money actually flows through your business. The table shown below includes annual growth, target current ratio, total current assets, and current liabilities. So again we stuck up at after all, how much? Well, for that you just have to keep a projected income statement beside you which includes both projected sales and cost of goods sold. Then we can estimate how much additional working capital is needed for your business and not only this. Using this, we can also figure out the changes that can be made to working capital for accounts receivables, payables, and inventory.

All-In-One Commercial Lending
231 E Alessandro Blvd # A 348
Riverside CA 92508

Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.