Working capital is where your cash-conversion-cycle work becomes machinery. Days ratios are the assumption, and balances are the consequence. Rearrange the definitions you already own. DSO = AR/Revenue × 365 inverts to AR = Revenue × DSO/365. DIO and DPO invert the same way on COGS. One convention is worth pinning. Receivables days run on revenue. Inventory and payables days run on COGS, since stock and supplier credit are carried at cost. Some practitioners run all three on revenue for speed, which is fine if disclosed. Cost-based is cleaner, though. It's also what your cash conversion cycle used. The historical ratio and the forecast formula must use the same base, whichever you choose. Otherwise your "45 days" means two different things on the two sides of the A/E boundary. The two catch-all lines are other current assets (deposits, prepaid, sundry advances) and other current liabilities (accruals, statutory dues). Both are modeled as % of revenue, since they're too mixed for days logic and too small to deserve more.
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How do you forecast working capital in a model?
On M, build the schedule block in rows 69 to 74, with the header in 69:
| M row | Line | Formula in F (fill right to J) | Reads |
|---|---|---|---|
| 70 | Accounts receivable | =F7*A!F30/A!$C$9 | Revenue × DSO / days-in-year |
| 71 | Inventory | =F9*A!F35/A!$C$9 | COGS × DIO / days |
| 72 | Other current assets | =F7*A!F53 | % of revenue |
| 73 | Accounts payable | =F9*A!F40/A!$C$9 | COGS × DPO / days |
| 74 | Other current liabilities | =F7*A!F54 | % of revenue |
Then link the balance sheet: F25 =F70, F26 =F71, F27 =F72, F32 =F73, F33 =F74, each filled right. The indirection matters because statements are outputs. They assemble, and schedules calculate. The habit feels ceremonial in a model this small. It becomes survival in the bigger builds ahead, when four schedules feed one balance sheet.
Note what you haven't built: the change-in-working-capital lines. Deltas belong to the cash flow statement, computed from the balance-sheet rows. One home per number. Models that compute ΔWC in the schedule and again on the CFS invariably let the two drift apart.
Checkpoint 2 (Base). FY26: AR 164.1, Inventory 135.7, OCA 26.6, AP 102.8, OCL 39.9. FY30: AR 227.4, Inventory 188.0, AP 142.5. Now read the economics the way an analyst would. At flat days, working capital grows in step with the business. Each year Kaveri must fund roughly (AR + Inv + OCA − AP − OCL) ≈ 14% of the revenue increase before a rupee of profit becomes cash. That number, the working-capital intensity of growth, is the bridge between "profits are not cash" and the reinvestment rate from your forecasting work.