4.4 Capital requirement calculation
4.4.5 Total capital requirement
The total capital requirement results from the difference
- of the available equity and the required debt capital for the financing of fixed assets (including start-up financing),
- in current assets from the necessary turnover of goods as well as from receivables and liabilities.
The capital requirement results when all income is deducted from expenditure.
|
Revenue |
Turnover + other income |
|
- Expenditure |
Investments + Operating expenses + Liabilities - Receivables |
|
= Capital requirement |
Difference in euros |
Calculation method
To be able to determine a funding gap, the monthly income must be subtracted from the expenses. The difference results in a profit or a loss. The profit and loss account or the income statement determines this data constantly.
In the following example, the capital requirement of an entrepreneur in January is € 1,000. Because the expenses do not cover the income, the capital requirement temporarily increases to a maximum of € 5,000; it amounts to € 3,000 in June. By the month of March, the company actually needs € 5,000 in additional capital to meet its obligations. If the money is not available then, insolvency is imminent. The maximum financing gap must be determined.
Calculation scheme for the capital requirement
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The accuracy of the capital requirements calculation depends on the available operational data. The more complex business units are, the more differentiated the capital requirement calculation must be. Simple rough calculations do not go far enough.