Estimation of working capital-item detailed estimation method

Registered Consulting Engineer Examination, Methods and Practice Chapter 7. Estimation of working capital (item detailed estimation method)

Edited at 2022-01-10 15:57:57

PlotWizard

Recent works View more works>>

Estimation of working capital-item detailed estimation method

PlotWizard

Recent works View more works>>

Recommended to you
Outline

Liquidity = Current Assets – Current Liabilities

1 Current assets

1.1 Accounts receivable = annual operating costs (General questions will be given directly)

Purchased raw materials, fuel and power costs

salary or salary

repair fee

other fee

It is not necessary to consider the extension here

1.2 Prepaid accounts

Prepaid raw materials and fuel costs

Prepaid annual service fee

1.3 Inventory

1.3.1 Annual expenses for purchased raw materials, fuel, and power

1.3.2 Years of outsourcing other materials

1.3.3 Products in progress

Annual outsourced raw materials, fuel, and power costs

Annual salary and benefits

annual repair cost

Other manufacturing expenses per year

1.3.4 Finished products

Annual operating costs - annual other operating expenses

1.4 Cash

Annual salary and benefits

Other annual expenses

Manufacturing costs

Management costs

Operating expenses

-Minus: wages and welfare expenses, depreciation expenses, amortization expenses, and repair expenses included in the above three expenses)

No extension required here

2 Current liabilities

2.1 Accounts payable

Annual outsourcing costs for raw materials, fuel, power and other materials

2.2 Advance payments

Annual amount of operating income received in advance

Inventory = raw materials, work in progress, finished goods, that is: Raw materials in the warehouse, products on the production line, and finished products that have been stored after production. The working capital of raw materials must be calculated once the turnover of raw materials, fuel and power Products also require raw materials, fuel power, labor, and other manufacturing during production, so here is the turnover of the sum of raw materials, fuel power, labor, and other manufacturing during production. For finished products, in addition to the cost of the production process (raw materials, fuel and power, labor, other manufacturing), there is also the sum of other management fees, so this is another turnover. In general, raw materials, fuel, power, and labor are used in different situations, and they all constitute inventory, so they must be calculated separately. The fundamental reason is for the sake of financial stability, because the production and sales links are a cycle, which takes up funds and time. Before the cycle is completed, the funds will be occupied. If one of the cycles is completed but the other is not, the funds will be occupied. If there is no recovery, the entire project operation will be stopped. Therefore, in terms of calculation, the funds required for each cycle are listed separately. This will cause repeated calculation of funds (because part of the funds for the next process may come from the previous process). ) But this takes into account the independent operation of each process cycle and makes the finance more stable.