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RIMAIAgribusiness SchoolMy land

D-working-capital Dictionary

Working Capital

The money needed to run the business between paying costs and receiving sales

All termsIntroduced in Module 2Open the Toolkit
An open dictionary on a farm office desk
Plain meaning
The money needed to run the business between paying costs and receiving sales
How to use it
Add up every cost paid before the first sale and the months it must be carried. That figure, not the cost of equipment alone, is the real start-up requirement.
South African benchmark
Concept term; South African production loans finance working capital for the season.
Country notes
Where interest rates are high, as in Zimbabwe and Zambia, every extra month of working capital costs more and shorter cycles are worth more.
Go and read
M19-U4
Calculate it
T-C-04 Twelve-Month Cash Flow
Library sources
LIB-A004, LIB-A019
See also
Off-taker, Contract farming, Break-even volume
Twelve-month cash flow showing money out before money in and the lowest cash pointTwelve months of cash: money out first, money in laterJFMAMJJASONDRed dot: the lowest cash point, the working capital you must fundMoney in (sales)Money out (inputs, labour, loan)Running cash balance
Working capital, shown as a diagram.

Introduced in C2 Money for the Farm.