1. Quantitative: All elements of current assets.
2. Qualitative: In addition to considering the elements of current assets, accrued liabilities, so that operations are not disrupted for debt.
3. Functional working capital: focus on the function of the funds in generating direct income.
Current Assets: Fixed Assets
• Cash 20 000 Land 50.000
• Securities 50.000 Building 70 000
• Accounts receivable 80 000 Machinery 100.000
• Inventories 30 000
a. Depreciation for one year : Building:. 10.000, – Machine . 5000
b. Credit sales with a profit margin of 20%.
from the data above can be calculated, the amount of working capital according to functional concept:
Receivables 80% =.
Depreciation for Building =
Depreciation Machine =
Potential working capital
Profit Margin =
Non working capital:
Determination of Working Capital Requirement:
a. Method of attachment of funds
There needs to be two factors that influence that is: The binding of working capital and projected cash needs the average per day.
Attachment of funds means the cash is spent and how long it back into cash.
For Services: Cash = goods = Receivables = Cash
For industry: Cash = Raw materials = product process = Finished goods = Receivables = Cash
PT Arema Malang has a production plan of 1,000 units of goods per day. For one unit required 1.5 kg of material goods, the price per kg is 2.000. Average raw materials stored in warehouse seven days, three days of production process, finished goods stored in warehouse 10 days . Average accounts receivable 30 days. Direct labor per unit of 3000, marketing expenses in cash per month to 10.000.000, – administrative fee per moth 5,000,000. Other cost-per-month average of Rp. 9,000,000 – Cash determined minimum amount of . 6,000,000.
From these data, the binding of working capital and funding requirements are as follows.
The binding of funds:
a. The duration of the raw materials stored =
b. The duration of the production process =
c. The duration of finished goods stored =
d. The duration of accounts receivable =
Cash needs per day:
a. Purchases of raw materials =
b. Direct wage payments =
c. Marketing costs =
d. Cost adm. =
e. Other payments =
Total working capital required :
binding of the fund x cash needs per day + minimal cash.