Categories
Uncategorized

Calculating Working Capital for a Mineral Water Business

Created July 2026

Most of the businesses who shut down, are observed to have failed due to improper management of Working Capital. The story of Mineral Water Business is no different.

Steps to Arrive at Working Capital Required for a Mineral Water Business

Assuming that it is a Production Unit, the amount of the working capital depends upon the Plant Capacity1, and what daily production it has been designed for.

Time needed: 5 minutes

Note The Steps

  1. Calculate Gross Working Capital

    Check the Inventory on Floor, Total Debtors & Total Creditors. Note that you will need to subtract the creditors figure from Raw Stock Value recorded.

  2. Deduct Any Ineligible Debtors from That

    Debtors older than 90 days wont be eligible

  3. Calculate How Much Against Stock

    Bank usually gives 75% on Stock.

  4. Calculate against Debtors

    Bank gives 60% against Debtors.

  5. Aggregate That

    Aggregate to get the Actual Drawing Power you get. This much is the working capital you have.

Why is Working Capital So Important ?

Working capital is the daily financial pulse of any business. It bridges the gap between the money you owe suppliers and the payments you are waiting to receive from customers. With healthy working capital, you don’t have to pause operations or take high-interest short-term loans to cover rent, vendor bills, or staff salaries. It protects your credit reputation in the market and gives your business the stability to scale confidently.

Simple Tricks to optimize Working Capital

  • Keep a track of the Days the Stock is held.Try to reduce the number of days.
  • Try to be prompt to collect supplier payments.Timely recovery frees your drawing limit.
  • Try to get Credit from suppliers. This is interest free money.

Take care not to squeeze suppliers beyond a limit. Keep a very tight control on the number of days you release payments. This not only builds brand, but also builds a solid culture within the organization. I have witnessed certain companies not only pays in advance, but also pay interest on late payments if at all.

Beware :- There is interest on Working Capital

It’s not free money, but banks charge heavt interest on Working Capital. The more is your CCC ( Cash Conversion Cycle ) the better for banks, not at all good for you. Companies with excellent Working Capital Management, perform very well.

It Needs Regular Monitoring

If not daily, but it’s a good practice to have a weekly review of working capital. It helps you to tweak the background activities, in Time !

Check the “Mentoring” Service Option on our Consultancy Page

This Hindi Video Explains in Details

Footnotes

  1. Plant Capacity is measured in Bottles per day it produces ↩︎