Walkthrough · Lesson 2 of 5

Forecast margins and working capital

Turn the sales assumptions into earnings and a cash investment.

Working files

Your closing bridge balances.

Continue in your working file or use the starting checkpoint above.

Variable direct cost and fixed overhead respond differently to growth.

Inflate the fixed cost base
FY2025 gross profit is $31.92m. Deduct $15.12m EBITDA to establish $16.80m overhead. Inflate overhead by 3% annually while sales grow 5.5%.

Base case

Model Exercise!I7:P20Open full size · Operating forecast in the Port Alder solved workbook.
Use the right base for each day
Calculate AR on revenue and inventory and AP on positive cost of goods. Subtract AP to calculate NWC. Compute FY2025 on the same basis before calculating the first change.
```
NWC = sales × 36 / 365 + COGS × (31 - 48) / 365.
```

An operating forecast through FY2030 and a schedule of cash tied up in working capital.

Reference result · See Instructions!C7:C39. The worked transaction inputs are at Model Exercise!D7:E27. Model amounts are USD thousands. FY2025 SG&A
$16.8m
Gross profit minus EBITDA.
Mechanical check · Years 2026–30 Working-capital sign

A positive inventory or receivable increase consumes cash. An increase in supplier credit offsets that use.

Figures are rounded for display. Check your formulas at full precision. Displayed totals may differ slightly.

If your result differs

The Year 1 working-capital investment equals the whole closing balance.: Start from historical working capital, then subtract the opening balance from FY2026.