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How to calculate Emergency fund target

The Emergency fund target formula, with plain worked examples you can check yourself.

Emergency fund target = E × m

Worked examples

E = 3500 · m = 6Emergency fund target = 21,000
E = 1500 · m = 12Emergency fund target = 18,000
E = 1500 · m = 3Emergency fund target = 4,500

How to use it

  1. Write down the values for each letter in the formula.
  2. Do the brackets first, then divide or multiply.
  3. Check the units before you compare results.
  4. Compare the answer with last period or with a competitor to see if it is good or bad.

This formula belongs to Cash & Liquidity.

Related terms

Cash flowLiquidityWorking capitalOverdraft

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