How to calculate working capital loan needs

1. How to calculate the demand for working capital loans

In 2009, one of the core contents of the "Measures for the Administration of Working Capital Loans" promulgated by the China Banking Regulatory Commission requires banking financial institutions to Reasonably calculate the borrower's working capital needs, prudently determine the borrower's total credit limit for working capital loans and the specific loan amount, and issue working capital loans accordingly, and shall not lend more than the borrower's actual needs. In actual work, how should rural credit cooperatives scientifically and reasonably calculate the amount of working capital occupied by the enterprise based on the characteristics of the enterprise's production and operation, and based on this, determine the reasonable demand for working capital loans in different periods to improve the efficiency of fund use. It can not only effectively meet the needs of enterprises for working capital loans for normal operations, but also effectively prevent loan funds from being misappropriated due to loans exceeding actual needs, thereby effectively preventing credit risks. Based on the actual work, the author should focus on the following factors for analysis in actual operations: 1. The main financial indicators that affect the demand for working capital in the calculation table: monetary funds and accounts receivable under the current assets account Four indicators include payment, inventory, and prepaid accounts. Current liability indicators: four indicators including expenses payable, accounts payable, notes payable, and accounts received in advance. These indicators are closely related to enterprise production and sales. Other current asset items: such as monetary funds, notes receivable, other receivables, notes payable, other payables, salaries payable, taxes payable, etc., account for a very small proportion in the statements, but in actual statements these are often The subjects that are not considered have a greater impact on the calculation of working capital needs. Therefore, there is a large gap between the demand calculated based on the formula recommended by the China Banking Regulatory Commission and the actual demand. Therefore, if you consider non-formula subjects when calculating, you must also consider everything. 2. Investigate the development scale of the enterprise and reasonably determine the working capital loan demand. The calculation is based on the difference between the working capital required for the borrower's daily production and operation and the existing working capital (i.e., the working capital gap). The formula used by rural credit cooperatives to estimate the borrower's new working capital loan limit is: New working capital loan limit = required amount of working capital - borrower's own funds - existing working capital loan - working capital provided by other channels. Amount of working capital = sales revenue of the previous year × (1 - sales profit margin of the previous year) × (1 estimated annual growth rate of sales revenue) / number of operations. Number of operations = sales revenue of the previous year / average effective operating assets average effective operating assets = (effective operating assets at the beginning of the year and effective operating assets at the end of the year) / 2 The definition of each item in the calculation formula should be correctly understood: "Working capital loan": including the borrower's All working capital loans from various financial institutions. "Working capital provided by other channels": refers to liabilities used for operations other than working capital loans, including accounts payable, notes payable, accounts received in advance, other payables, etc. "Borrower's own funds": refers to the part of the borrower's owner's equity that is used for the daily operations of the enterprise. Effective operating assets should be based on current assets, deducting receivables aged more than 2 years, inventories that are difficult to participate in turnover, long-term debt investments due within one year, net losses of various pending current assets, etc. that are not involved or ineffective. Assets involved in production and operation turnover. Bank loans that are due to be settled and will not be renewed can be excluded from current current liabilities; under the premise that the risks are controllable, the portion of the borrower's own funds that will be used to purchase long-term assets or distribute dividends can be excluded. Assuming that the borrower's own funds, existing working capital loans, working capital provided by other channels, and sales revenue are constant, the amount of new working capital loans is directly proportional to the amount of working capital, and inversely proportional to the number of operations, that is to say, the same The faster a business operates (more frequently), the fewer working capital loans it requires, and conversely, the more working capital loans it requires. Therefore, if a company has relatively large current assets and relatively small current liabilities, it means that the company's short-term solvency is strong; conversely, it means that the company's short-term solvency is weak.

However, if the indicator value is too high, the company may not make good use of cash resources. On the other hand, if the indicator value is too low, it means that the company may have a payment crisis. The third is profitability analysis. The profitability analysis indicator is the net cash flow from operating activities divided by the net profit after tax. It mainly reflects the degree of difference between the net cash flow from operating activities and the net profit of the current period, that is, how much of the net profit realized in the current period is There is a cash guarantee. 6. Other factors that affect the calculation of working capital needs: First, the financial system of most small and medium-sized enterprises is not perfect, and the amount of working capital and self-owned funds calculated in accordance with the working capital loan management methods are mostly inaccurate, resulting in the final calculated bank credit. The amount has no actual reference value. For example, many small and medium-sized enterprises are private enterprises, mainly family-run. Business leaders have serious centralization and "small farmer" consciousness. They often hide sales revenue and profits to reduce taxes. At the same time, business profits are mostly used by the bosses. Private expenditures or external investments are reflected in "other payables" in the form of personal investments, resulting in "individualization of public and private" corporate finances, which in turn results in a large deviation between the calculation results and the actual results. In addition, some small and medium-sized enterprises, in order to make their statements look good, put the funds that should be classified as "long-term liabilities" in the "capital reserve", causing the illusion that the enterprise has more own funds when calculating, but the actual own funds are insufficient. . In addition, some small and medium-sized enterprises have met their needs by inflating their registered capital in order to meet the bidding qualification level. Second, due to irregular financial accounting of small and medium-sized enterprises, part of the existing working capital loans of small and medium-sized enterprises are occupied by fixed asset investment, resulting in a large deviation between the estimated working capital loan limit that banks can grant and the actual needs of enterprises. For example, many small and medium-sized enterprises purchase second-hand machinery and equipment or self-made equipment and do not require counterparties to issue invoices in order to save expenses; some investment in the construction of factories is not carried out in accordance with the prescribed procedures. These investments cannot provide project approval, feasibility reports and other information, and cannot The application of fixed asset loans has led to the situation of "short-term loan and long-term use". Third, many small and medium-sized enterprises lock in raw material prices by concentrating on raw material reserves at the beginning of the year to avoid the adverse effects of raw material price fluctuations. This will lead to particularly large centralized demand for loans by enterprises, which will lead to a large deviation between the calculated credit limit and the loan amount required by the enterprise. Li Xuedong, Chen Tong

2. What does the increase in working capital mean?

It is the amount of increased working capital in the coming period compared with the previous period or previous periods. The formula is: the amount of working capital in this period - the amount of working capital in the previous period or previous periods = the increase in working capital.

For example, the total working capital in this period is 1.5 million, and the total working capital in the previous period was 1.2 million. The increase in working capital in this period is: 150-120 = 300,000. Working capital is the monetary funds that the enterprise can pay at any time.

3. What is the formula for calculating the new working capital loan limit?

Owned funds refer to self-owned working capital, that is, the self-owned working capital used for operating turnover after deducting the owner's equity from other funds such as fixed assets. There is obviously a problem with deducting all self-owned funds. Most of the company's self-owned funds are used for fixed capital investment and are not used for working capital. It should be more reasonable to deduct the part of the borrower's own funds used for working capital. . Summary

Question on how enterprises calculate the amount of new working capital loans

Hello, I am a lawyer from Baidu Platform. I have received your question. What is the specific situation here? Tell me in detail so that I can give you a better answer. Answer

Hello, I am a lawyer on the Baidu platform. I have received your question. What is the specific situation here? Tell me in detail so that I can give you a better answer.

Answer

Hello, I have a question about the calculation formula of enterprise borrowing own funds

Borrower’s own funds = owner’s equity – non-current assets. Is this the case, or is it borrower’s own funds = Non-current liabilities owner's equity - non-current assets question

Teacher, my question is how to calculate the borrower's own funds

I paid for the question, why no one responded to my question

Owned funds refer to self-owned working capital, that is, the self-owned working capital used for operating turnover after deducting the owner's equity from other funds such as fixed assets. There is obviously a problem with deducting all self-owned funds. Most of the company's self-owned funds are used for fixed capital investment and are not used for working capital. It should be more reasonable to deduct the part of the borrower's own funds used for working capital. . Answer

Borrower's own funds = (owner's equity long-term liabilities) - (total assets - current assets)

Among them, long-term liabilities are mainly long-term borrowings (if any)

If it is a positive number, it means that the borrower has its own funds;

If the result is a negative number, it means that its own funds are zero. Answer

Teacher’s question on whether long-term payables count

Yes, answer

Borrower’s own funds = (owner’s equity long-term liabilities) - (total Assets - current assets)

The long-term liabilities are mainly long-term borrowings (if any) answer

4. What is the formula for calculating the new working capital loan limit?

New working capital loan limit = amount of working capital - borrower's own funds - current working capital. So as long as you know the amount of working capital, the borrower's own funds, existing liquidity, and working capital provided by other channels, then you can know the new flow

How is this calculation formula derived? What about?

Fund management is the core of corporate financial management, and ensuring that the company has sufficient working capital in daily operations is also a key task of capital management. When an enterprise has insufficient short-term liquidity, it can borrow funds without other sources of funds and explain the amount of the new liquidity gap to the financial institution, which is the credit line for applying for a working capital loan. So as long as you know these 4 variables, you can calculate the new addition which is very easy to calculate.

What is the purpose of calculating this amount?

In fact, calculating this amount is very useful. It can clarify the loan amount of the company this year, and it can borrow this amount from the bank to invest in production. If not, you don’t know that the company will be very confused this year. Here's how three of the variables are calculated. Amount of working capital = sales revenue of the previous year (1-sales profit margin of the previous year) (1)/number of operations. Number of operations = sales revenue / (average current assets - average current liabilities). Own funds refer to the own working capital, that is, the own working capital used for operating turnover after deducting the fixed capital from the owner's equity.

As long as you know these three variables, then you can calculate the new addition, which is very easy to calculate and does not require too many complicated procedures.