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Most textbooks define the working capital requirements in a very brief and prices wording, as:
"The required value of funds that a company is required to keep on hand in order to be able to pay its debt obligations and other business related expenses. Several factors go into the determination of this requirement.
There are broadly three methods of estimating or analyzing the requirement of working capital of a company viz. percentage of revenue or sales, regression analysis, and operating cycle method. Estimating working capital means calculating future working capital. It should be as accurate as possible because the planning of working capital would be based on these estimates and bank in addition to other financial institutes finance the working capital needs to be based on such estimates
