Free tool
Working Capital Calculator
Estimate the cash tied up in operations. Pulls together AR aging, inventory days and AP terms to show what your working capital really looks like.
- Average AR balance
- ₹ 1,64,38,356
- Average inventory
- ₹ 49,31,507
- Average AP balance
- − ₹ 73,97,260
- Cash conversion cycle
- 45 days
- Working capital required
- ₹ 1,39,72,603
Working capital = AR + Inventory − AP. Cash conversion cycle = DSO + Inv days − DPO. Reducing DSO by 10 days frees up ~27,39,726 in cash for this revenue.
How working capital is calculated
Working capital is the cash tied up in day-to-day operations. The simple operating definition is:
Working capital = Accounts Receivable + Inventory − Accounts Payable
Each component is computed from the relevant days metric:
- Average AR balance = (Annual revenue × DSO) / 365
- Average inventory = (Annual COGS × Inventory days) / 365
- Average AP balance = (Annual COGS × DPO) / 365
The cash conversion cycle (CCC) is the number of days between paying for inventory and receiving cash from customers:
CCC = DSO + Inventory days − DPO
Why this matters
Working capital is cash you cannot use for growth, dividends or debt reduction. Reducing the CCC frees cash. The most common levers:
- Cut DSO, better collections, smarter dunning, credit limit enforcement, early-payment discounts.
- Cut inventory days, faster turns, better demand forecasting, dropship where possible.
- Stretch DPO, negotiate longer terms with vendors (without straining the relationship).
Free download
CFO working capital playbook (PDF).
21 levers to compress the cash conversion cycle, ranked by impact and effort. Industry benchmark table for 10 industries, a board-ready monthly working capital report template, and a DSO improvement roadmap.
Working capital FAQ
Common questions.
What is a "good" cash conversion cycle?
Highly variable by industry. Software / SaaS often has CCC near zero (subscription billing means receipts up front). Manufacturing typically runs 60-120 days. Retail (with fast inventory turns and trade credit) can be near zero or negative. The right benchmark is your own trend over time and direct competitors.
Why does reducing DSO matter so much?
Cash held in receivables is cash you cannot deploy. For a ₹100 Cr revenue business, every day of DSO is roughly ₹27L of cash. Cutting DSO by 10 days frees up ₹2.7 Cr permanently, without raising debt or equity. That cash can fund inventory growth, debt reduction or operations.
What about prepaid expenses, advances and other items?
The calculator focuses on the operating working capital (AR + Inventory − AP). The accounting definition of working capital (Current Assets − Current Liabilities) includes more items: cash, marketable securities, prepayments, accrued expenses, short-term debt. For operating decisions the simpler version is more actionable.
How can I track DSO / DPO / inventory days in real time?
These metrics are computed continuously inside OneFinOps from your AR, AP and inventory ledgers. The CFO and controller dashboards show DSO, DPO, inventory days, CCC and trend. No spreadsheet pull required.
How does this differ from a CFO operating-cash-flow view?
Operating cash flow includes profit, depreciation/amortisation and tax, not just working capital. The working capital calculation tells you the change in cash tied up in operations; the OCF calculation tells you the cash generated by operations. They are related but not the same.
Related tools
More for cash and the close.
- DSO / DPO / CCC CalculatorDays metrics with industry benchmarks. The companion to this absolute-cash view.
- MSME Late Payment InterestSection 16 compound interest at 3x RBI bank rate when AP stretches past 45 days.
- India Compliance CalendarGST, TDS, PF/ESI, PT, MCA and IT deadlines, month by month.
- GST Late Fee CalculatorLate filing fee + 18% Section 50 interest for delayed GSTR returns.
Working capital, in real time.
DSO, DPO, inventory days and CCC computed continuously from your live AR, AP and inventory data inside OneFinOps. No spreadsheet pulls.