This document provides an overview of working capital modeling. It includes definitions of different types of working capital, components of working capital, the importance of managing working capital, elements that make up working capital calculations, sources of working capital, the working capital cycle, optimization of working capital, and steps for computing working capital. Tables are also included showing examples of yearly and monthly working capital calculations.

1. Working
Capital
Modeling
Your Company Name

2. Content
➢ Kinds Of Working Capital
➢ Working Capital Components
➢ Working Capital Importance
➢ Working Capital Elements
➢ Working Capital Sources
➢ Working Capital Cycle
➢ Working Capital Optimization
➢ Working Capital Description
➢ Working Capital Management
➢ Yearly Net Working Capital Table
➢ Monthly Working Capital Calculation Table
➢ Working Capital Modelling Chart
➢ Working Capital Computation Steps Chart
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3. Kinds of Working Capital
Kinds of Working Capital
Basic of Concept Basic of Time
Gross Working
Capital
Net Working
Capital
Permanent/Fixed
Working Capital
Temporary/Variable
Working Capital
Regular Working
Capital
Special Working
Capital
Seasonal Working
Capital
Reserve Working
Capital
3
This slide shows the
working capital types
form which the user can
select any to manage day
to day trading operations.

4. Working Capital Components
Account Management
Invoicing & Billing
Payments and Collections
Order Management
Quality
Procurement
Storing & Delivery
Production
Storing &
Delivery
4
This slide shows the
various elements that are
included in managing
firm’s working capital
efficiently.

5. Working Capital Importance
Enhance
Goodwill
Easy Obtaining
Loan
Regular Supply of
Raw Material
Smooth Business
Operation
Ability to Face
Crisis
Strengthen the
Solvency
Importance of
Working Capital
This slide shows why an
organization needs to
manage its working
capital effectively.
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6. Working Capital Elements
6
This slide shows what
exactly is included while
analyzing working capital
i.e. current assets and
liabilities.
Working Capital
Current Assets Current Liabilities
Cash and Cash Equivalents
Marketable Securities
Accounts Receivable
Notes Receivable
Inventory
Text Here
Bank Indebtedness
Accounts Payable
Accrued Liabilities
Short –Term Loans
Text Here
Unearned Revenues

7. Working Capital Sources
Sources of Working
Capital
Long Term Short Term
Internal Sources
(Retained
Earnings)
External Sources
(Equity, Loan)
Internal Sources
(Accrual,
Depreciation Funs)
External Sources
(Trade Credit,
Advances)
7
This slide shows the
sources from where
working capital expenses
can be made i.e. short
and long term.

8. Working Capital Cycle
Cash
Raw
Material/Inventory
Finished Goods
Account
Receivables
Working
Capital Cycle
8
This slide shows general
working capital cycle
which stating the time
taken to turn current
assets and liabilities into
cash.

9. Working Capital Optimization
9
This slide is useful to
optimize the balance
between assets and
liabilities of a company.
Rules And Guidelines To Control Cash
Across The Business
Including Rolling WC Measures In Performance
Management And Incentives
E-learning Planforms For
Diverse Business
Tacking Sundry Wc As A
Part of Day Job
Optimizing Indirect Tax And
Duty Phasing
Regular Balance
Sheet Diet
Evaluate Supply Chain
Financing
Robust credit control routinel focused on
collections
Management of passthrough cost significant revenue
assurance opportunity
Global payment processing
policies
Working capital and cash impact of
new market
Complexity management leg SKU
limits and KPLs
Structured approach to
cash release
Order
to Cash
Inventory
Purchase
to Pay
Operational
Working
Capital
Customer
Segmentation
& Channels
Footprint
Product
Development
& Services
Strategy
Organization
Capability
Control
Visibility
and Control
Treasury
Tax
Capex And
Asset Man-
Agement
Supply
Chain
Financing
Other

10. Working Capital Description
Current Assets CA:
Cash $22,000.00
Account Receivable 11,000.00
Inventories 40,000.00
70,000.00
Current Liabilities CL:
Accounts Payable $24,000.00
Short-Term Borrowing 4,000.00
Accrued Liabilities 11,000.00
50,000.00
Working Capital WC: $50,000.00
CA
-
CL
=
WC
10
This slide shows the
general working capital
description example with
formula.

11. Working Capital Management
Working Capital Management
Inventory
• Raw Materials
• Work in Progress
• Finished Products
Receivables
• Amounts Owed by Customers
• Prepayments to Suppliers
Other Current Assets
• Prepaid Expenses
• Operating Cash
Payables
• Amounts Owed to Suppliers
• Prepayments by Customers
Other Current Liabilities
• Short-team Debt
• Accrued Expenses
Working Capital = Inventory + Account Receivables + Others Current Assets – Account Payables – Other Current Liabilities
11
This slide shows all the
elements that comprises
working capital
calculation.

12. Yearly Net Working Capital Table
Year 2015 2016 2017 2018 2019
Working Capital ($ 0.00) Assets
1 Accounts Receivable
2 Raw Materials
3 Finished Goods
4 Minimum Cash Balance
17.485
1.475
3.596
2.286
18.485
1.575
3.586
2.276
19.485
1.675
3.576
2.266
20.485
1.775
3.566
2.266
14.485
1.875
3.556
2.256
15.485
1.975
3.546
2.246
5 Total Current Assets 29.850 28.850 27.850 26.850 25.850 24.850
Liabilities
6 Wages Payable 7.850 5.850 2.850 8.840 8.844 4.854
7 Other Account Payables 8.150 8.852 4.850 8.550 8.553 8.450
8 Total Current Liabilities 5.850 8.870 8.450 8.847 8.850 8.840
Net Working Capital
9 Net Working Capital (5-8) 25.820 20.800 27.830 28.850 29.850 38.850
10 Increase In Net Working Capital 4.850 5.850 6.850 7.850 8.850 9.850
12
This slide shows the
computation of yearly net
working capital of an
organization.

13. Monthly Working Capital Calculation Table
Month Accounts Receivable Inventory Accounts Payable Working Capital KPIS
January $21.200.00 Text Here $15.000.00 $20.300.00 Text Here
February $22.020.00 Text Here $25.000.00 $29.200.00 Text Here
March $23.200.00 Text Here $39.000.00 $28.900.00 Text Here
April $24.020.00 Text Here $48.000.00 $27.800.00 Text Here
May $25.200.00 Text Here $57.000.00 $26.700.00 Text Here
June $26.020.00 Text Here $66.000.00 $25.600.00 Text Here
July $27.200.00 Text Here $75.000.00 $24.500.00 Text Here
August $28.020.00 Text Here $84.000.00 $23.400.00 Text Here
September $29.200.00 Text Here $93.000.00 $22.300.00 Text Here
November $20.020.00 Text Here $32.000.00 $21.200.00 Text Here
December $15.200.00 Text Here $21.000.00 $20.100.00 Text Here
c c c c c c
13
This slide can be used to
calculate an
organization’s monthly
working capital amount.

14. Working Capital Modelling Chart
Period Start 01-Jan-19 01-Apr-19 01-Jul-19
Period End 30-Dec-19 31-Mar-19 30-Jun-19 30-Sep-19
Trade Debtors Account
Balance B/F - 30.34 30.64
Revenue Receivable 1,201.88 31.00 101.00 111.00
Revenue Received Debtor Days (1,142.00) (33.20) (42.00) (40.00)
Balance C/F 30 32.70 33.81 30.80
Trade Creditors Account
Balance B/F - 30.24 30.24
Costs Payable 2,201.82 32.00 121.00 121.02
Cost Paid Creditor Days (1,122.00) (33.22) (22.00) (421.00)
Balance C/F 30 32.72 32.81 12.85
Working Capital Adjustments
Debtors - (22.20) (1.35) (1.20)
Creditors - 13.20 1.20 1.10
Net Adjustment - (25. 2) (2. 23) (42. 2)
14

15. Working Capital Computation Steps Chart
Assumptions:
Sales $400,000 Cost of Goods Sold (“COGS”)/ Purchases:$350,000
Accounts Receivable Terms: 30 Days Inventory:16 days on hand
Accounts payable Terms: 29 days
Step 1
Calculate Accounts Receivable (“A/R”) Strat Up
Balance
Projected Sales
÷365
X # Days in A/R Term
A/R Balance
$400,000
÷ 365
X 30
$40,096
Step 2 Calculate Inventory Start Up Balance
Projected COGS
÷ 365
X # Days Inventory on Hand
Inventory Balance
$320,000
÷ 365
X 15
$15,616
Step 3
Calculate Accounts Payable (“A/P”) Start Up
Balance
Projected COGS
÷ 365
X # Days in A/P Term
A/P Balance
$350,000
÷ 365
X 30
$30,220
Step 4 Determine Working Capital Needed
A/R Balance
+ Inventory Balance
- A/P Balance
Working Capital Needed
$40,090
+$11,510
-$30,220
$20,475
c
15
This slide is useful to
demonstrate the steps
that are included in
calculating working
capital.

16. Working Capital Modeling Icon Slides
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