Working capital requirement calculation is a fundamental tool used to assess the financial position of a business, by measuring its short term assets and liabilities. It involves calculating the current assets and liabilities of the company, and subtracting them from each other in order to determine the company’s working capital balance. This number is then used to create a business budget for upcoming projects or transactions, identify areas where cash might be needed, and build financial forecasts. By understanding your business’s working capital requirement calculation, you can have more control over your finances with greater confidence in reaching long-term goals.