If we deduct current liabilities from current assets of the company during a period (usually a year) we would get working CAPITAL. Working capital is the DIFFERENCE between how much cash is tied up in inventories, accounts RECEIVABLES etc. and how much cash needs to be paid for accounts payable and other short-term obligations.
From the working capital, you would also be able to understand the ratio (current ratio) between current assets and current liabilities. The current ratio will give you an idea about the liquidity of the company.
Generally, when you forecast Working Capital, you do not take Cash in “Current Assets” and any debt in the “Current Liabilities”.
Working Capital Forecast essentially involves forecasting Receivables, Inventory, and Payables.

Accounts RECEIVABLE Forecast:

Generally modeled as Days Sales Outstanding;
Receivables turnover = Receivables/Sales * 365
A more detailed approach ma include aging or receivables by business segment if the collections vary widely by segments
Receivables = Receivables turnover days/365*Revenues

Inventories Forecast:

Inventories are driven by costs (never by sales);
Inventory turnover = Inventory/COGS * 365; For Historical Assume an Inventory turnover number for future YEARS based on historical trend or management guidance and then compute the Inventory using the formula given below
Inventory = Inventory turnover days/365*COGS; For Forecast

Accounts Payable Forecast:

Accounts Payables (Part of Working Capital Schedule):
Payables turnover = Payables/COGS * 365; For Historical Assume Payables turnover days for future years based on historical trend or management guidance and then compute the Accounts Payables using the formula given below

Accounts Payables = Payables turnover days/365*COGS; for Forecast.

If we deduct current liabilities from current assets of the company during a period (usually a year) we would get working capital. Working capital is the difference between how much cash is tied up in inventories, accounts receivables etc. and how much cash needs to be paid for accounts payable and other short-term obligations.
From the working capital, you would also be able to understand the ratio (current ratio) between current assets and current liabilities. The current ratio will give you an idea about the liquidity of the company.
Generally, when you forecast Working Capital, you do not take Cash in “Current Assets” and any debt in the “Current Liabilities”.
Working Capital Forecast essentially involves forecasting Receivables, Inventory, and Payables.

Accounts Receivable Forecast:

Generally modeled as Days Sales Outstanding;
Receivables turnover = Receivables/Sales * 365
A more detailed approach ma include aging or receivables by business segment if the collections vary widely by segments
Receivables = Receivables turnover days/365*Revenues

Inventories Forecast:

Inventories are driven by costs (never by sales);
Inventory turnover = Inventory/COGS * 365; For Historical Assume an Inventory turnover number for future years based on historical trend or management guidance and then compute the Inventory using the formula given below
Inventory = Inventory turnover days/365*COGS; For Forecast

Accounts Payable Forecast:

Accounts Payables (Part of Working Capital Schedule):
Payables turnover = Payables/COGS * 365; For Historical Assume Payables turnover days for future years based on historical trend or management guidance and then compute the Accounts Payables using the formula given below

Accounts Payables = Payables turnover days/365*COGS; for Forecast.