Working Capital Lockup Carry Cost Calculator

Quantify how many dollars are locked in working capital, how many days that cash is tied up, and how much the carry 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, the cycle days, and the financing burden.

Total revenue recognised over the last twelve months, net of returns.
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 over 60 days 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 across a 33-day cycle.
  • $65,000,000 revenue, 48-day DSO, 40-day DIO, 12% cost, 45-day DPO ⇒ 43 days of net working capital require $7,660,273.97 and cost $919,232.88 annually to finance.

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.

How do early-payment discounts affect the model?

If you take supplier discounts instead of extending DPO, lower the DPO input to the actual payment days and add the discount cost into the cost of capital percentage to capture the trade-off.

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 and highlight cash trapped per day.
  • 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.
  • Monitor the working capital days output to spot progress when tightening receivables, turning inventory faster, or renegotiating payables.

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