7/2/2025
7/2/2025
FRNG calculation: control your working capital
Your company's financial management is based on key indicators, and overall net working capital (ONWC) is one of the most important. A true barometer of financial health, it determines your organization's ability to finance its day-to-day operations and maintain financial equilibrium. But how can you calculate it effectively and use it as a genuine management tool?
The fundamentals of FRNG in business management
Overall net working capital represents the part of stable resources that finances your company's cyclical needs. Find out how to choose the right financing for your business, because as a manager, you absolutely must have this financial reserve to guarantee the continuity and development of your operations.
Why is the NGRF essential to your business?
Balanced working capital enables you not only to meet your current expenses, but also to absorb seasonal variations and unforeseen events. This financial leeway becomes particularly valuable in periods of growth or economic tension.
ℹ️ Consider the example of an e-commerce company with annual sales of €2 million: with an NRLF of €300,000, you can calmly manage your seasonal supplies and maintain optimal stock levels even during periods of high demand.
Detailed methods for calculating the NGBR
The permanent capital approach
The first calculation method is based on the upper part of the balance sheet:
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This approach enables you to carry out an in-depth analysis of your financial structure. To understand the importance of this balance, consult our guide to corporate financing in France.
The components you need to consider are :
- Shareholders' equity: share capital, reserves, net income for the year
- Long-term financial debts: your bank loans, bonds, etc.
- Fixed assets: your tangible, intangible and financial assets
Analyzing the balance sheet from the bottom up
The second method offers a complementary view:
NGBR = Current assets - Current liabilities
ℹ️ Imagine an industrial company with current assets of €800,000 (inventories, trade receivables and cash) and current liabilities of €500,000 (trade payables and tax liabilities): you have an NIF of €300,000, showing a good capacity to finance your operating cycle.
Sector standards and strategic interpretation
The interpretation of your NIRF varies considerably depending on your industry. To understand the specifics of your industry, a key question is: how do companies finance their investments?
Typical working capital requirements to be considered by sector :
- Retail: 20-30% of your sales
- Manufacturing industry: 25-35% of your sales
- Business services: 5-15% of your sales
- E-commerce: 15-25% of your sales
ℹ️ In the industrial sector, if your company generates sales of €5 million, you should ideally maintain a NIRF of between €1.25 and €1.75 million to ensure optimal management of your operating cycle.
Strategies for optimizing FRNG
Managing your working capital requires a global approach. To optimize your cash flow, you need to act on several strategic levers:
Inventory management :
- Setting up your minimum stock policy
- Optimizing your supply chain
- Regular analysis of your inventory turns
Managing your payment terms :
- Negotiate your supplier conditions
- Speed up your customer collections
- Setting up efficient dunning processes
Your financial structure :
- Balancing your short- and long-term financing needs
- Optimizing your capital structure
- Active cash management
Karmen financing solutions for your optimal FRNG
To meet your cash flow challenges, we have developed Karmenan innovative and flexible solution. Our offer includes :
- Loans from €30K to €5M
- Flexible durations from 1 to 24 months
- A simplified, fast award procedure
- Personalized support
This solution enables you to strengthen your NGNFR while preserving your financial flexibility. Whether you want to finance your inventories, cover your working capital requirements or support your growth, Karmen adapts to your specific needs.
The FRNG is much more than a simple financial indicator: it's an essential strategic tool for steering your company. Controlling it enables you to anticipate your cash flow needs, secure your development and maintain your competitiveness in the marketplace. By combining a rigorous analysis of your FRNG with tailored financing solutions like Karmen, you have all the tools you need to optimize your financial structure and sustainably support your company's growth.
