When quoting an international buyer, understanding the difference between FOB (Free On Board) and CIF (Cost, Insurance and Freight) is important.
FOB pricing generally covers the goods and the seller’s obligations up to the agreed point of shipment, while CIF pricing includes the cost of the goods, insurance and freight to the destination port.
Use the FOB vs CIF Calculator below to estimate the difference and understand how freight and insurance affect your export price.
Working Capital Calculator Pro
Know How Much Working Capital Your Business Really Needs
Free ToolInputs
Current Assets
Current Liabilities
Uses Current Assets and Current Liabilities from the Working Capital tab. Fill those values first, or enter totals below.
Quick Ratio excludes inventory. Uses assets/liabilities from Working Capital tab when available.
Results
Current Asset Composition
Assets vs Liabilities
💡 Smart Business Insights
🔮 What-If Analysis
See how sales growth or inventory/debtor changes affect working capital need.
What is Working Capital?
Working capital is the money available for day-to-day operations: Current Assets minus Current Liabilities. Positive WC means you can cover short-term obligations.
Current Ratio
Current Assets ÷ Current Liabilities. A ratio around 1.5–2.0 is often considered healthy for many MSMEs, but ideal levels vary by industry.
Quick Ratio
(Current Assets − Inventory) ÷ Current Liabilities. Measures ability to pay short-term debts without selling stock.
Cash Conversion Cycle
Days Inventory + Days Receivable − Days Payable. Shorter cycles mean cash returns faster to the business.
📌 Practical MSME Tips
- Collect payments faster — reduce debtor days.
- Cut slow-moving inventory to free cash.
- Negotiate longer supplier payment terms where sustainable.
- Maintain an emergency cash reserve for 1–2 months of expenses.
- Review WC monthly; seasonal businesses need extra buffer.
Frequently Asked Questions
What is net working capital?
Net working capital = Current Assets − Current Liabilities. It shows short-term liquidity available for operations.
What is a good current ratio for MSMEs?
Often 1.5 to 2.0 is comfortable, but trading firms may run leaner and manufacturers may need higher coverage.
Why is quick ratio lower than current ratio?
Because inventory is excluded. Inventory may not convert to cash quickly.
How do I estimate working capital requirement?
Based on operating cycle: funds tied in inventory and receivables, minus credit from suppliers, scaled to your sales and expenses.
What is cash conversion cycle?
Time (in days) between paying for inputs and collecting cash from customers.
Can working capital be negative?
Yes. It means current liabilities exceed current assets — a liquidity risk that needs attention.
Does inventory always help liquidity?
No. Excess or slow-moving stock locks cash and weakens the quick ratio.
How can exporters manage WC?
Factor longer shipment and collection cycles, currency risk, and packing credit / export finance products.
Is cash credit the same as working capital?
Cash credit is a financing facility often used to fund working capital needs; WC itself is a balance-sheet measure.
How often should I recalculate WC?
At least monthly, and whenever sales, credit terms, or inventory policy change.
What % of sales should WC be?
It varies widely by industry. Track your own trend rather than a single benchmark.
How do creditor days help?
Longer payable periods reduce WC need, but must stay within supplier relationships and discounts lost.
What is the operating cycle?
Inventory days + receivable days — how long cash is tied in operations before collection.
Can this replace a CA’s advice?
No. Use it for planning and education; consult professionals for financing and compliance decisions.
How does seasonality affect WC?
Peak seasons often need higher inventory and receivables funding — plan facilities in advance.
Disclaimer: This calculator provides estimated values for educational and business planning purposes only. Actual working capital requirements depend on your business model, industry, operating cycle and financial policies.
What Is the Difference Between FOB and CIF?
FOB and CIF are Incoterms used in international trade to define responsibilities, costs and risk between the seller and buyer.
FOB Price
Under FOB, the seller generally handles the costs and responsibilities required to deliver the goods on board the vessel at the agreed port of shipment.
CIF Price
Under CIF, the seller generally arranges and pays for the cost of the goods, insurance and freight to the named destination port.
The exact responsibilities and transfer of risk depend on the applicable Incoterm and contract terms. Always confirm the agreed Incoterm and named place or port in your sales contract.
Simple formula
A simplified calculation is:
CIF Price = FOB Value + Freight + Insurance
The actual calculation can depend on the transaction, insurance method, freight quotation and contract terms.
Why Should Exporters Compare FOB and CIF Prices?
An exporter may receive a buyer enquiry asking for either an FOB or CIF quotation.
Comparing both can help you understand:
- Your actual export costs
- International freight costs
- Insurance costs
- Buyer-facing selling price
- Potential profit margin
- The impact of shipping costs on the final quotation
This is particularly useful when freight rates change significantly between destinations.
Before sending a quotation, exporters should also confirm the correct Incoterm, named place or port, currency, payment terms and other commercial conditions with the buyer.
How to Use the FOB vs CIF Calculator
- Enter your FOB value or relevant product cost.
- Enter the applicable freight cost.
- Add the applicable insurance cost.
- Review the estimated CIF value.
- Use the result when preparing your export quotation.
The calculator provides an estimate for comparison and planning. Always use the actual freight and insurance quotations applicable to your shipment when preparing a final commercial quotation.
🔗 Useful BusinessZindagi Resources
👉 How to Find International Buyers Without Visiting Trade Fairs
👉 How to Find Export Buyers Using Import-Export Data
👉 BusinessZindagi Export & Import Tools
🔎 Find Buyers Before You Export
Calculated your FOB or CIF price? The next step is finding the right international buyer.
With Volza, you can research actual import-export shipment data to discover potential buyers, suppliers, products and markets.
👉 Explore Volza Global Import-Export Data
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