Business
Working Capital Forecast Calculator
Forecast opening and final-month net working capital from revenue, cost of goods sold, DSO, DIO, DPO, revenue growth, opening cash, and a minimum cash reserve.
Opening monthly cost of goods sold-
Opening accounts receivable requirement-
Opening inventory requirement-
Opening accounts payable funding-
Opening net working capital-
Cash conversion cycle-
Final-month revenue-
Final-month net working capital-
Additional working capital through horizon-
Opening cash after modeled NWC growth-
Cash above entered reserve after NWC growth-
Decision view
Cash-conversion-cycle timeline and funding band
Cash-conversion-cycle timeline and funding bandDSO, DIO, and DPO are placed on a timing diagram while opening and final working capital are reconciled with cash and reserve.
Exact scenario comparisonDays sales outstanding changes while all other entered assumptions remain constant.
| Days sales outstanding | Opening monthly cost of goods sold | Opening accounts receivable requirement | Opening inventory requirement | Opening accounts payable funding | Opening net working capital | Cash conversion cycle | Final-month revenue | Final-month net working capital | Additional working capital through horizon | Opening cash after modeled NWC growth | Cash above entered reserve after NWC growth |
|---|
Period-by-period detail
Monthly working-capital and cash requirement forecast
How to use Working Capital Forecast Calculator
- Enter normalized monthly revenue and COGS percentage.
- Enter observed DSO, DIO, and DPO from the same reporting period.
- Set growth, horizon, opening cash, and reserve; review the funding gap before approving growth.
Calculator guide
Understanding Working Capital Forecast Calculator
Working capital is cash tied up in receivables and inventory after supplier credit is deducted. This forecast makes that funding requirement and the cash-conversion timing explicit.
Detailed calculation process
Convert operating days into a working-capital funding forecast
The default uses $250,000 monthly revenue, 58% COGS, 45 DSO, 60 DIO, 30 DPO, $150,000 opening cash, 3% monthly growth, 12 months, and a $75,000 reserve.
General formula: C = R * m / 100AR = R * DSO / 30INV = C * DIO / 30AP = C * DPO / 30NWC_0 = AR + INV - APCCC = DSO + DIO - DPOg_n = (1 + g / 100)^(n - 1)R_n = R * g_nNWC_n = NWC_0 * g_nDeltaNWC = NWC_n - NWC_0Cash_n = Cash_0 - DeltaNWCH = Cash_n - Reserve Receivables follow revenue, while inventory and payables follow COGS. Their difference is opening net working capital. Because the model holds all operating-day assumptions constant, final-month working capital grows by the same factor as revenue; only the increase consumes opening cash.
What each symbol means
Worked substitution with the default inputs
The default 75-day cash-conversion cycle requires $520,000 of opening NWC; growth raises it by $199,801.61 and leaves reserve headroom of -$124,801.61.
Purpose-built visual
Cash-conversion-cycle timeline and funding band
A live timing diagram shows the DSO, DIO, and DPO components while a funding band compares opening and final working capital with available cash.
Worked situations
Practical examples
- At the default operating days, receivables require $375,000, inventory requires $290,000, and supplier payables finance $145,000, leaving $520,000 of opening net working capital.
- With 3% monthly growth for 12 months, final-month NWC reaches $719,801.61 and absorbs $199,801.61 more cash than the opening month.
Better inputs
Useful tips
- Calculate DSO, DIO, and DPO from the same recent operating period before using them in the forecast.
- Apply revenue and cost growth consistently so receivables, inventory, and payables do not use mismatched bases.
- Model seasonality, tax payments, debt service, and one-time inventory builds separately from ordinary working capital.
Before relying on the result
Limitations and common mistakes
- The model holds COGS rate and all three operating-day assumptions constant.
- Seasonality, bad debt, deposits, tax, capital spending, financing, and timing within a month are not modeled.
- Use consistent accounting definitions and validate the forecast against a monthly balance-sheet schedule.
Reference
Key terms
- Net working capital
- Receivables plus inventory minus accounts payable in this operating model.
- Cash-conversion cycle
- DSO plus DIO minus DPO, expressed in days.
- Reserve headroom
- Modeled cash after working-capital growth minus the entered minimum reserve.
Important note
A negative reserve headroom is a modeled funding requirement under the entered operating-day assumptions, not a complete insolvency conclusion.
Frequently asked questions
Why is payables subtracted?
Supplier credit finances part of the operating cycle and reduces the company's own cash requirement.
Why does final NWC grow at the revenue rate?
The model assumes margin and operating days remain constant, so every component scales with revenue.
Can the cash-conversion cycle be negative?
Yes. Strong advance collection or long supplier terms can make DPO exceed DSO plus DIO.
Is negative headroom insolvency?
No. It is a planning signal under the entered assumptions, not a complete liquidity or solvency assessment.