Working Capital Assessment: Worked MSME Example
Understand projected current assets, current liabilities and net working capital with an example.
Worked example: Projected turnover ₹5 crore.
Assume projected annual turnover of ₹5 crore. The business forecasts inventory of ₹80 lakh, trade receivables of ₹70 lakh, other current assets of ₹10 lakh and current liabilities excluding bank borrowing of ₹60 lakh.
| Item | ₹ lakh |
|---|---|
| Inventory | 80 |
| Receivables | 70 |
| Other current assets | 10 |
| Total current assets | 160 |
| Current liabilities excluding bank borrowing | 60 |
| Working capital gap | 100 |
The working capital gap is not automatically the eligible bank finance. Banks may require borrower contribution, apply turnover-based or operating-cycle methods, and assess liquidity ratios and drawing power. For example, if the stipulated borrower contribution is ₹25 lakh against the gap, illustrative bank finance would be ₹75 lakh, subject to policy and eligibility.
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Assumptions and limitations
These examples are educational and use the stated illustrative assumptions. Actual interest and repayment calculations can depend on day-count convention, compounding, rounding, moratorium, fees, rate resets, sanction conditions and bank policy. Verify against the sanction letter and account statement.