Working Capital Requirement Calculator

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Working Capital Requirement Calculator

A Working Capital Requirement Calculator estimates the amount of working capital required to support day-to-day operations based on operating balances and target working capital days. More info →

Input

Revenue

COGS

Inventory

Receivables

Payables

Target Working Capital Days

Target Days Inventory Outstanding

Target Days Receivable Outstanding

Target Days Payable Outstanding

Enter business operating figures and target working capital days to estimate the working capital requirement.

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How This Calculator Works

Working capital is the cash tied up in running the business day to day: stock on the shelf plus money customers owe, minus money you owe suppliers. This calculator compares how much you have tied up today with how much you would need at your target number of days, so you can see cash that could be released.

The Formulas

Current Working Capital = Inventory + Receivables − Payables
Working Capital Required = (COGS ÷ 365) × Target Inventory Days + (Revenue ÷ 365) × Target Receivable Days − (COGS ÷ 365) × Target Payable Days
Working Capital Blocked = Current − Required

NWC days = Inventory days + Receivable days − Payable days · Inventory days = Inventory ÷ COGS × 365 · Receivable days = Receivables ÷ Revenue × 365 · Payable days = Payables ÷ COGS × 365

What Each Input Does

Revenue / COGS: Yearly sales and cost of sales, used to turn balances into days.
Inventory / Receivables / Payables: Today's balances, which make up current working capital.
Target Inventory / Receivable / Payable Days: The days you aim for. Together they set the target working capital.

Step by Step

Current inventory, receivable and payable days are worked out.
Current and target net working capital days are worked out.
Target inventory and payable days are costed at daily COGS, and target receivable days at daily revenue, to give the working capital required.
Current working capital minus required gives the amount blocked.

Reading the Result

Positive blocked amount – more cash is tied up than needed and could be released.

Negative – you need extra working capital to reach the target.

Quick Example

Revenue 3,650,000, COGS 2,190,000, inventory 300,000, receivables 500,000, payables 240,000; targets of 45 / 40 / 40 days. Today you run 50 + 50 − 40 = 60 days against a target of 45. Current working capital is 560,000. At target, daily COGS of 6,000 and daily revenue of 10,000 give 6,000 × 45 + 10,000 × 40 − 6,000 × 40 = 430,000 needed, so 130,000 is blocked (required WC is 11.78% of revenue).