How To Count Work Capital To Prevent Budget Defisit

Illustration of working capital (Pixabay)

YOGYAKARTA How to calculate working capital is an important thing that a person must know when starting a business.

With information about working capital, you can determine whether a company can pay its short-term obligations and how long it will take.

Companies whose working capital is lacking will have problems in the future. Therefore, working capital calculations are very useful to see if business activities are running quite efficiently when utilizing business resources.

How to Count Work Capital

Before entering the discussion on how to calculate working capital, you need to know what working capital is.

Quoted from the official website of the Financial Services Authority, working capital is the difference between smooth assets and smooth debts to finance business activities (working capital). Thus, it can be said that the formula calculates working capital = smooth assets current debt.

In more detail, here's how to calculate working capital, as compiled by VOI from various sources:

What is meant by smooth activation is assets owned by companies that are easily disbursed in the form of money and used to fund the company's daily operational activities.

Examples of smooth assets are cash, short-term investment, trade receivables, income receivables, and trading goods supplies.

Rumus calculates smooth assets = cash/equivalent cash + short Jagka investment, trade receivables + income receivables + trading goods inventory

Current debt is an obligation that will mature within one year. Current debt includes trade debt, debt that must be paid, and wesel pay.

The way to hold debt smoothly is to increase trade debt, tax debt, short-term debt, and other debts in the balance sheet report.

As mentioned above, working capital is obtained after a reduction between smooth assets and smooth debts.

An example of working capital calculation is as follows:

You need to be aware that the amount of current debt is greater than the smooth activation. This is because this indicates a working capital deficit.

The working capital deficit could be a clue that the company is insulating (the situation of not being able to pay its debts or financial obligations on time).

Although insolvent can be overcome by applying for debt restructuring, this condition indicates problems within the company.

Tips Avoid Work Capital Defisit

So that your company does not experience a working capital deficit and insolvention, do the following:

That's the information about how to calculate working capital. Hopefully it will be useful!