Working Capital Calculator
Calculate your company's working capital, current ratio, and quick ratio to assess financial health
| Metric | Your Value | Healthy Range | Interpretation |
|---|---|---|---|
| Working Capital | - | Positive | Positive = Can cover short-term obligations |
| Current Ratio | - | 1.5 - 3.0 | Measures short-term liquidity |
| Quick Ratio | - | 1.0 - 2.0 | Measures immediate liquidity (without inventory) |
Working capital measures a company's operational efficiency and short-term financial health. These metrics help assess whether a business has enough short-term assets to cover its short-term liabilities.
• Positive working capital balance
• Current ratio between 1.5 and 3.0
• Quick ratio above 1.0
• Indicates ability to grow and invest
• Negative working capital
• Current ratio below 1.0
• Quick ratio below 0.5
• May indicate liquidity problems
A Working Capital Calculator helps businesses assess their short-term financial health by measuring the difference between current assets (cash, receivables, inventory) and current liabilities (payables, short-term debt). It determines if a company can cover its short-term obligations and fund day-to-day operations.
How a Working Capital Calculator Works
Working Capital Formula
Working Capital Ratio Formula
Key Inputs Required
Current Assets (Liquid & Near-Term Resources)
✔ Cash & cash equivalents
✔ Accounts receivable (money owed by customers)
✔ Inventory (sellable goods)
✔ Short-term investments
Current Liabilities (Due Within 1 Year)
✔ Accounts payable (money owed to suppliers)
✔ Short-term loans
✔ Accrued expenses (wages, taxes)
✔ Credit card debt
Example Calculation
| Category | Amount ($) |
|---|---|
| Current Assets | |
| - Cash | 50,000 |
| - Accounts Receivable | 30,000 |
| - Inventory | 20,000 |
| Total Assets | 100,000 |
| Current Liabilities | |
| - Accounts Payable | 25,000 |
| - Short-Term Debt | 15,000 |
| Total Liabilities | 40,000 |
| Working Capital | $60,000 |
| Working Capital Ratio | 2.5 (100,000 ÷ 40,000) |
Interpreting Results
| Working Capital | Working Capital Ratio | What It Means |
|---|---|---|
| Positive | > 1.0 | Healthy liquidity; can cover short-term debts |
| Negative | < 1.0 | Risk of cash flow problems; may need financing |
| Excessively High | > 2.0 | Possible inefficient use of assets (too much idle cash/inventory) |
Why Working Capital Matters
✅ Cash Flow Management – Ensures bills and payroll can be paid on time.
✅ Loan Approvals – Lenders check working capital for creditworthiness.
✅ Business Growth – Funds inventory purchases, marketing, and expansion.
✅ Crisis Preparedness – Buffers against unexpected expenses.
Best Working Capital Calculators
Investopedia Working Capital Calculator (Simple & educational)
Bankrate Business Finance Calculator (Includes ratio analysis)
QuickBooks Working Capital Tool (For small businesses)
How to Improve Working Capital
✔ Speed Up Receivables – Offer early payment discounts.
✔ Delay Payables – Negotiate longer terms with suppliers.
✔ Optimize Inventory – Avoid overstocking slow-moving items.
✔ Secure a Line of Credit – For short-term gaps.
Working Capital vs. Cash Flow
| Metric | What It Measures |
|---|---|
| Working Capital | Snapshot of liquidity at a point in time |
| Cash Flow | Movement of cash in/out over a period |
Tip: A company can have positive working capital but negative cash flow if receivables are delayed.
When to Recalculate
Before applying for a business loan
Quarterly for financial health checks
When experiencing rapid growth or losses