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Accounting Working Capital (Per-Unit) Calculator

Estimate the working capital tied up per unit and in total using production costs, selling price and operating-cycle days.

Your Details

Overview

Use this Accounting Working Capital (Per-Unit) Calculator to estimate the cash tied up in raw materials, work in progress, finished goods and customer receivables for each planned unit of output. Add your unit costs, selling price, annual volume and typical inventory and payment days to see the estimated funding requirement.

How it works

The calculator estimates average balances by multiplying annual material cost, production cost or sales value by the relevant holding or payment days, then dividing by 365. Raw materials, work in progress, finished goods and receivables increase the funding requirement. Supplier credit reduces it. Total net working capital is divided by planned annual units to show an estimated amount per unit.

How to use this calculator

  1. 1Enter the number of units you expect to sell during the year.
  2. 2Add direct material cost and labour and overhead cost for one completed unit.
  3. 3Enter the selling price used for credit sales.
  4. 4Set average days for raw materials, work in progress, finished goods, customer payments and supplier credit.
  5. 5Choose the average completion level of work in progress.
  6. 6Review the estimated working capital per unit and total funding requirement.

Example Calculation

Annual units sold

12000

Material cost per unit

$25

Labour and overhead per unit

$15

Selling price per unit

$55

Raw material holding days

30

Work in progress days

10

Average WIP completion

50%

Finished goods holding days

20

Customer payment days

45

Supplier credit days

30

Working capital per unit

$9.52

With these assumptions, the estimated net working capital requirement is about 9.66 per unit, or about 115,890 in total. The simple net operating cycle is 75 days.

Frequently asked questions

What is working capital per unit?

It is the estimated net cash tied up in supporting each planned unit of annual output after allowing for supplier credit. It helps translate an overall working capital estimate into a unit-based figure.

Why are receivables valued at the selling price?

Receivables represent the amount customers owe after a credit sale, which is normally based on the invoiced sales value. Inventory is instead valued at its cost.

Why does supplier credit reduce working capital?

Supplier credit delays cash payment for purchased materials. This provides short-term funding and offsets part of the cash tied up in inventory and customer balances.

How should I choose a work in progress completion percentage?

Use the average cost completion of units in production. For example, 50% means average work in progress is treated as having incurred half of its total material, labour and overhead cost.

Does this include cash, taxes and loans?

No. The calculation focuses on operating inventory, receivables and supplier payables. It excludes cash reserves, tax balances, loans, interest and other balance-sheet items.

Can the working capital result be negative?

Yes. A negative result can occur where supplier credit is greater than the value tied up in inventory and receivables. This may be possible in some business models, but payment timing should be checked carefully.

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Assumptions and warnings

Assumptions

  • The business operates consistently throughout a 365-day year at the planned annual sales volume.
  • Raw materials and supplier credit are valued using direct material cost only.
  • Work in progress is valued using the selected average completion percentage for total production cost.
  • Finished goods are valued at production cost, while receivables are valued at the selling price.
  • The result is an estimate and excludes cash balances, taxes, selling expenses, financing costs and other current assets or liabilities.

Warnings

  • This calculator provides an estimate only and is not accounting or financial advice.
  • Actual working capital needs can change with seasonal demand, payment delays, stock losses, taxes and supplier terms.
Accounting Working Capital Per-Unit Calculator