Working Capital Calculator

The Tandon Committee (1975) divides working-capital finance into 3 methods: 1st method (cash budget / projections), 2nd method (current assets - current liabilities excluding bank borrowings) and 3rd method (15% of current assets as minimum bank borrowings). Banks typically use the 2nd method for limits up to ₹5 crore.

MPBF (Maximum Permissible Bank Finance) = 75% of Working Capital Gap under the 2nd method, with a further ceiling of 25% of current-assets-maximum-bank-borrowings (CAMB) under the 3rd method. Calculator applies both limits and surfaces the binding lower figure.

Cash Credit (CC) limit is provided against hypothecation of stocks and book debts, with quarterly stock statement. Overdraft (OD) is unsecured and can be drawn against any current asset. CC typically has lower interest (10-12%) than OD (12-16%).

Operating cycle = Inventory days + Receivable days - Payable days. A 90-day operating cycle for ₹100 crore sales needs ~₹25 crore of working capital. Shortening the operating cycle by 15 days frees ~₹4 crore. The calculator exposes these gaps line by line.

Yes — interest on CC, OD, term loans and bill discounting is fully deductible under Section 37(1) against business income, when used for business purposes. Stamp-duty and processing fees are capitalised and amortised over the loan tenure.

CMA (Credit Monitoring Arrangement) data is a 7-part annual statement with projected P&L, balance sheet, fund flow, working-capital estimates, MPBF calculations and margin details. Calculator outputs key inputs (WC gap, MPBF, interest cost) that feed CMA Part-III / IV.