Work out working capital limit assessment instantly with clear inputs, formula shown and shareable results.
Working capital need is sized from sales and the operating cycle, reduced by supplier credit already funding it. The bank finances the gap less the promoter's margin, which is the borrower's own stake in the current assets.
Limit assessment
Gross WC = sales × cycle days / 365; limit = (gross WC - creditors) × (1 - margin)
Figures are estimates based on the inputs given. Bank charges, regulatory minima and market rates change and differ between institutions and jurisdictions. This is not financial advice — confirm with your bank or treasury policy.
Because supplier credit already finances part of the current assets, so bank finance would be duplicating it.
Faster inventory turns and quicker collections both cut the cycle and therefore the borrowing needed.