Working Capital Requirement Calculation

Turnover 1,500,000
Costs as % of sales
Materials 30%
Labour 25%
Other Variable costs 10%
Fixed costs (Rent) 15%
Distribution 5%
Operating Cycle
Customers take 2.5 months to pay
Materials are in stock for 3 months
Finished goods are 1 months production
Credit is as follows
Materials 2 Months Variable costs 1 month
Fixed Costs 1 month Distribution 2 weeks

1
 Working Capital Requirement Calculation
Financing Requirement Example
%
Turnover 100% 1,500,000
Materials 30% 450,000
Labour 25% 375,000
Variable Cost 10% 150,000
Fixed Cost 15% 225,000
Distribution 5% 75,000

Average Value of Assets Average Value of Liabilities

Raw Materials 3 months 112,500 Raw Materials 2 Months 75,000
Finished Goods Variable Cost 1 Month 12,500
Materials 1 Month 37,500 Fixed Costs 1 Month 18,750
Labour 1 Month 31,250 Distribution 2 Weeks 3,125
Variable Cost 1 Month 12,500 Total Liabilities 109,375
81,250
Customer Debtors 2.5 Months 312,500
Total of Assets 506,250

Financing Requirement 396,875 2

 Is it too early to do some individual work?
Financing Requirement Example
%
Turnover 100% 2,400,000
Materials 15%
Labour 45%
Variable Cost 9%
Fixed Cost 5%
Distribution 5%

Average Value of Assets Average Value of Liabilities

Raw Materials 2 months Raw Materials 3 Months
Finished Goods Variable Cost 1 Month
Materials 2 Months Fixed Costs 1 Month
Labour 2 Month Distribution 2 months
Variable Cost 2 Month Total Liabilities

Customer Debtors 0.5 Months

Total of Assets

Financing Requirement 3
 Is it too early to do some individual work
Financing Requirement Example
%
Turnover 100% 2,400,000
Materials 15% 360,000
Labour 45% 1,080,000
Variable Cost 9% 216,000
Fixed Cost 5% 120,000
Distribution 5% 120,000

Average Value of Assets Average Value of Liabilities

Raw Materials 2 months 60,000 Raw Materials 3 Months 90,000
Finished Goods Variable Cost 1 Month 18,000
Materials 2 Months 60,000 Fixed Costs 1 Month 10,000
Labour 2 Month 180,000 Distribution 2 months 20,000
Variable Cost 2 Month 36,000 Total Liabilities 138,000
276,000
Customer Debtors 0.5 Months 500,000
Total of Assets 836,000

Financing Requirement 698,000 4