How to Use This Calculator
- Enter your current annual revenue (total income from all business operations).
- Enter your projected annual revenue (expected income after expansion).
- Enter your current annual expenses (total costs for operations).
- Enter your projected annual expenses (expected costs after expansion).
- Enter your current working capital (current assets minus current liabilities).
- Enter your projected working capital (expected working capital after expansion).
- Click the "Calculate" button to determine how much additional funding is needed.
Understanding the Results
The calculator provides two key results:
- Additional Funds Needed: The total amount of capital required to support the projected growth. A positive value indicates additional funding is needed, while a negative value suggests surplus funds may be available.
- Projected Increase in Fixed Assets: The additional investment required in fixed assets (like property, plant, and equipment) to support growth.
Principles Behind the Calculation
This calculator uses the following formula:
Additional Funds Needed = Projected Working Capital + Projected Increase in Fixed Assets - Current Working Capital
The formula assumes that fixed assets increase proportionally with revenue growth. If your business has different fixed asset requirements, you may need to adjust the calculation accordingly.
Example Scenario
Suppose a business has:
- Current Annual Revenue: $500,000
- Projected Annual Revenue: $750,000
- Current Annual Expenses: $400,000
- Projected Annual Expenses: $600,000
- Current Working Capital: $50,000
- Projected Working Capital: $75,000
The calculator would determine that the business needs an additional $125,000 in funds to support the projected growth.