Working capital requirement
The working capital requirement is the capital requirement of a company that arises from its current assets . It serves to ensure the implementation of the operational performance process. The sum of the working capital requirement and the investment capital requirement results in the total capital requirement that is necessary for an investment .
The main determinant of the working capital requirement is the duration of the capital turnover : If it were possible to complete production within one day and to sell all of the products created on the following day, the working capital requirement would be lowest. In business practice, however, this rarely occurs, as down payments and loans on the one hand and different production periods on the other hand slow down the capital turnover process. The time structure of expenses and income is therefore decisive for the working capital requirement.
The working capital requirement can generally be defined as "Daily effort * capital tied up (in days)" and calculated as follows:
(Production period + storage time of finished goods + debtor period) * dsl. Daily labor costs
+
(Production time + storage time finished goods + debtor deadline + material storage time - supplier deadline) * dsl. Daily use of materials
+
(Production time + storage time finished goods + debtor deadline + material storage time) * dsl. Daily overheads
= Working capital requirement
There are two methods of calculating the working capital requirement:
- The cumulative method, in which the total capital lockup time is determined and multiplied by the average daily payouts:
Working capital requirement = duration of capital commitment minus supplier target * average daily payments
The working capital requirement determined can only be as precise as the method used allows it. The fact that payments have to be made at different times and at different intervals is not sufficiently taken into account here. Therefore there is an excessive capital requirement.
- The elective method is more accurate than the cumulative method. It takes into account the different retention periods of the wage, material and overhead costs.
Despite its greater accuracy, it is not possible to make precise statements about the working capital requirement even with the elective method. Nevertheless, the capital requirement calculation is used when setting up a company in order to obtain at least an approximate value.
Individual evidence
- ↑ Madlen Ventzislavova, Christian Hensel: Business administration formulas: Economic action. ISBN 978-3844807141 , p. 20.
- ↑ Manfred Jürgen Matschke / Thomas Hering / Heinz Eckart Klingelhöffer: Financial analysis and financial planning. Oldenbourg Verlag, Munich 2002 ISBN 3-486-25934-2 p. 139.
- ↑ Klauf Olfert: financing. NWB Verlag GmbH & Co. KG, Herne 1974 ISBN 978-3-470-53495-4 p. 78 f.