Working Capital Requirement Calculator
Calculate your business's working capital needs based on operating cycle
Business Metrics
Average days to sell inventory
Average days to collect payment
Payment Terms
Average days to pay suppliers
Annual growth rate projection
Understanding Working Capital Requirements
What is Working Capital Requirement?
Working Capital Requirement (WCR) represents the amount of funds needed to finance your business's day-to-day operations. It's calculated based on your operating cycle - how long it takes to convert inventory and receivables into cash.
Formula:
WCR = (Inventory × Daily Sales) + (Receivables × Daily Sales) - (Payables × Daily Purchases)
Cash Conversion Cycle
The Cash Conversion Cycle (CCC) measures how long it takes to convert investments in inventory and receivables back into cash.
CCC = DIO + DSO - DPO
Days Inventory Outstanding + Days Sales Outstanding - Days Payable Outstanding
Key Components
DIO - Days Inventory Outstanding
Average days to sell inventory
DSO - Days Sales Outstanding
Average days to collect receivables
DPO - Days Payable Outstanding
Average days to pay suppliers
Industry Benchmarks
Growth Impact
As your business grows, working capital requirements typically increase proportionally. This calculator helps you plan for the additional financing needed.
Pro Tip:
Negotiate better payment terms before rapid growth phases to reduce working capital strain.
💡 Optimization Strategies
Reduce Working Capital Needs
- • Implement just-in-time inventory
- • Offer early payment discounts
- • Improve demand forecasting
- • Negotiate extended payment terms
- • Consider drop-shipping arrangements
Finance Working Capital
- • Revolving credit facilities
- • Invoice factoring or discounting
- • Supply chain financing
- • Asset-based lending
- • Trade credit optimization