Working-Capital Financing Need

General

Accounting analysis usually uses VAT-exclusive sales and costs; cash-flow planning may also need VAT timing. When “including VAT” is selected, receivables and payables are scaled by (1+VAT); inventory stays exclusive because input VAT is typically recoverable.

Operating data

Net sales iNet sales are used to estimate trade receivables from DSO. Cost of goods sold iInventory need is based on COGS. Using sales would overstate inventory financing. Annual purchases (optional) iTrade payables should be based on purchases whenever available.

Other operating items (optional)

Other operating current assets

e.g. advances given, prepaid operating expenses, other operating current assets.

Other operating current liabilities

e.g. advances received, operating accruals, other interest-free operating current liabilities. Do not include bank loans.

Minimum operational cash buffer

This is a liquidity buffer, separate from operating working capital.

Minimum operational cash buffer Manual amount From days of operating spend Minimum cash amount

Financing sources (optional)

Long-term funds allocated to working capital Existing short-term WC facilities Factoring / trade finance Other financing sources Unused committed credit lines Annual working-capital financing cost (%)

Approximate annual cost = average amount financed × annual rate. This is an estimate, not a loan-level schedule.

Working-capital optimisation

Balance-sheet items

Bank loans are not treated as operating current liabilities. Cash is kept outside operational working capital.

Net sales are used to estimate trade receivables from DSO.

Growth financing need

Sales growth can raise cash need even when it creates profit, because receivables and inventory grow with sales. In high-growth periods a firm can be profitable and still tight on liquidity.

Stress test

Default shocks (DSO +15, DIO +15, DPO −10) are illustrative starting points, not sector standards or credit thresholds.

Apply stress scenario

Scenario comparison