Working Capital Lockup Carry Cost Calculator

Quantify how many dollars are locked in working capital and how much that drag costs annually. Provide trailing twelve-month revenue, receivable and inventory turns, the company cost of capital, and optionally your supplier payment terms to see the net working capital requirement and its financing burden.

Total revenue recognised over the last twelve months.
Average number of days invoices remain outstanding.
Average number of days inventory sits before sale.
Weighted average cost of capital applied to the tied-up cash.
Defaults to 30 days if blank to approximate typical payment terms.

Model assumes steady turns throughout the year. Validate with your treasury team before making liquidity decisions.

Examples

  • $48,000,000 revenue, 52-day DSO, 38-day DIO, 11% cost, 30-day DPO ⇒ Net working capital ties up $7,890,410.96 and generates $867,945.21 in annual carry cost.
  • $22,000,000 revenue, 35-day DSO, 28-day DIO, 8% cost, 30-day DPO ⇒ Lockup totals $1,989,041.10 with $159,123.29 in yearly financing drag.

FAQ

How should I treat seasonal peaks?

Use an average of the past few quarters or rerun the calculator for high and low seasons to bracket cash needs.

Does inventory valuation method change the result?

Yes—ensure DIO reflects the same costing method used in financial statements so the dollars tied up align with your books.

Can I include accounts payable financing fees?

Increase the cost of capital input to incorporate discount costs or financing charges tied to extending payables.

Additional Information

  • Working capital days are calculated as DSO + DIO – DPO, floored at zero so negative values indicate cash release.
  • Revenue is converted to average daily sales to translate days outstanding into dollars.
  • Carry cost multiplies tied-up cash by the provided cost of capital to reflect financing or opportunity cost.
  • Adjust DPO upward to simulate supply-chain financing programs or extended supplier terms.

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