# Working Capital

> Calculate net working capital, working capital ratio, cash conversion cycle, and funding requirements with the deterministic working-capital engine.

- Skill: `adamriofc/working-capital` (Agent Skill)
- Install (CLI): `npx skillmds@latest add adamriofc/working-capital`
- Raw SKILL.md: https://api.skillmd.com/api/skills/adamriofc/working-capital/raw
- Safety review: pending
- Works with: Claude Code, Claude.ai, OpenAI Codex
- Category: Coding & Dev Tools
- Author: adamriofc (https://skillmd.com/u/adamriofc)
- Updated: 2026-09-17
- Page: https://skillmd.com/skills/adamriofc/working-capital

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# Working Capital Management

Measures how much cash is trapped in the operating cycle and how much funding is required to run it.

## Metrics
* **Net Working Capital** = Current Assets − Current Liabilities.
* **Working Capital Ratio** = Current Assets ÷ Current Liabilities (≥ 1.5 conservative for SMEs).
* **Cash Conversion Cycle (CCC)** = DIO + DSO − DPO — days cash is tied up from buying stock until cash returns.
* **Working Capital Requirement** = CCC (days) × COGS per day — operational funding needs.

## Scope & Safety
* **Use for**: planning working-capital loan needs, negotiating supplier payment terms, assessing operational liquidity.
* **Do not use for**: long-term investment loan decisions (use capital-budgeting), or total solvency assessment.
* A long CCC means cash is absorbed into receivables/inventory — priorities: speed up collections, reasonably extend supplier payables, reduce dead stock.
* WCR figures are need estimates; add a 10–20% buffer for seasonality.

## Hybrid Execution Model
Pass inputs to `engines/working-capital.js`: `netWorkingCapital`, `workingCapitalRatio`, `cashConversionCycle`, `workingCapitalRequirement`. Wrap in a Trust Envelope (risk MEDIUM; as_of; human review for credit applications).

## Worked Example
Input: CA 500 million, CL 250 million; DIO 60 days, DSO 45 days, DPO 30 days; COGS/day 2 million.
Output: NWC = **250 million**; Ratio = **2.0**; CCC = 60 + 45 − 30 = **75 days**; Requirement = 75 × 2 million = **150 million**.
Interpretation: the business is liquid, but needs ~150 million to fund the 75-day working capital cycle.