What Is a Liquidity Gap?

The calculation of demand for working capital loans refers to the scientific and reasonable determination of the working capital occupation of enterprises based on the characteristics of the production and operation of the enterprise, and based on this, the reasonable demand for working capital loans in different periods is determined to improve the efficiency of capital use and ensure Reasonable use of funds. The demand for working capital loans shall be determined by the difference between the working capital required by the borrower for daily production and operation and the existing working capital (ie, the working capital gap).

Calculation of demand for working capital loans

Banking financial institutions, based on the borrower's current financial report and business development forecasts, measure their liquidity loan demand in the following ways:

Estimated amount of working capital

Factors affecting the borrower's working capital mainly include cash, inventory, accounts receivable, accounts payable, advance receipts, advance payments, etc. Based on the survey, predict changes in the turnover time of various funds, and reasonably estimate the amount of borrower's working capital. In actual calculation, the borrower's working capital requirements can refer to the following formula:

Amount of working capital = sales revenue for the previous year × (1-sales profit margin for the previous year) × (1 + estimated annual growth rate of sales revenue) / working capital turnover

among them:

1. Working capital turnover times = 360 / (inventory turnover days + accounts receivable turnover days-accounts payable turnover days + prepaid accounts turnover days-advance receipts turnover days)

2. Number of working capital turnover = net sales income / (average current assets-average current liabilities)

There is no problem with the above two formulas. Individuals tend to use formula 2.

Turnover days = 360 / turnover times

Accounts receivable turnover times = sales revenue / average accounts receivable balance

Turnover of advance receipts = sales revenue / average advance receipt balance

Inventory turnover times = cost of sales / average inventory balance

Prepaid Account Turnover Times = Cost of Sales / Average Prepaid Account Balance

Accounts payable turnover times = cost of sales / average accounts payable balance

Estimated new quota for working capital loan demand measurement

Subtracting the estimated borrower's working capital requirements from the borrower's own funds, existing working capital loans, and other financing, the amount of new working capital loans can be estimated.

New amount of working capital loans = amount of working capital-borrower's own funds-existing working capital loans-working capital provided by other sources

Other considerations in measuring demand for working capital loans

(1) Each banking financial institution should reasonably predict the turnover days of borrowers' receivables, inventory and payables based on actual conditions and future developments (such as the industry, scale, development stage, negotiation status, etc. of the borrower) , And can consider a certain insurance factor.

(2) For group related customers, the consolidated financial statements can be used to estimate the working capital loan quota. In principle, the total working capital loans of member enterprises included in the scope of the consolidated financial statements cannot exceed the estimated value.

(3) For small business financing, order financing, prepaid rent or temporary large debt financing, etc., on the basis of the authenticity of the transaction, to ensure effective control of use and repayment, the amount of working capital can be determined based on actual transaction needs .

(4) For seasonal production borrowers, the continuous production period of each year can be used as the calculation period to estimate the working capital requirements, and the loan period should be reasonably determined based on the repayment period.