Working Capital Calculator

Find working capital and the current ratio from your balance sheet.

Current assets

Cash, receivables, inventory due within a year.

Current liabilities

Debts due within a year.

Results update as you type.

Working capital

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Current ratio—

How it works

A working capital calculator measures a business's short-term financial health — its ability to cover the bills due within the next year using the assets it can turn into cash within the same window. You enter current assets, such as cash, accounts receivable and inventory, and current liabilities, such as supplier bills, short-term loans and taxes due, and the tool returns net working capital in dollars along with the current ratio. Working capital is the cushion that keeps a business running smoothly day to day: positive working capital means current assets comfortably exceed current obligations, so payroll, suppliers and rent can be met without scrambling, while negative working capital signals that short-term debts outweigh liquid resources and a cash crunch may loom. The current ratio expresses the same relationship as a multiple — a ratio of 2 means the business holds two dollars of current assets for every dollar of current liabilities. Lenders and suppliers examine both figures before extending credit, because they reveal whether a company can honour its commitments without new borrowing. The subtract method isolates the genuine short-term surplus, while the divide method scales it so businesses of different sizes can be compared. Owners use a working capital calculator to spot liquidity problems early, judge whether they can fund growth from within, and strike the balance between too little cushion, which risks insolvency, and too much idle cash, which earns nothing.

Formula

Working capital = current assets − current liabilities · Current ratio = CA ÷ CL

Current assets are resources expected to become cash within a year — cash itself, receivables and inventory — while current liabilities are obligations due within the same year. Subtracting liabilities from assets gives net working capital, the short-term surplus available to fund operations. Dividing current assets by current liabilities produces the current ratio, expressing the same liquidity as a multiple. Together they show whether a business can meet near-term obligations comfortably or is stretched dangerously thin.

Source:Standard financial (balance-sheet) accounting

We review all our tools from time to time to ensure accuracy.

Worked example

Current assets:300000Current liabilities:150000

Working capital = 300,000 − 150,000 = $150,000. Current ratio = 300,000 ÷ 150,000 = 2.0×.

How to use this calculator

1
Enter your values
Enter current assets and current liabilities.
2
Adjust the options
Fine-tune any options to match your situation.
3
Read your result
Working capital updates instantly as you type — no button to press.

Frequently asked questions

What is a healthy amount of working capital?

Positive working capital, where current assets exceed current liabilities, is the baseline for comfortably meeting short-term obligations. A current ratio between roughly 1.5 and 2 is often considered healthy across many industries, indicating a solid cushion without excessive idle resources. The right level depends on your sector and cash-conversion cycle, though — fast-turning retailers can safely run leaner than manufacturers with long production cycles, so compare against industry peers rather than a single universal target.

What does negative working capital mean?

Negative working capital means current liabilities exceed current assets, so on paper the business may struggle to cover debts due within the year from its liquid resources. For most companies this is a warning of potential liquidity trouble. However, some efficient businesses — large retailers that collect cash instantly but pay suppliers later — operate deliberately with negative working capital and remain perfectly healthy. Context matters, so read it alongside the cash-conversion cycle and the nature of the business model.

What is the difference from the current ratio?

Working capital and the current ratio measure the same relationship in two forms. Working capital is an absolute dollar figure — current assets minus current liabilities — showing the size of the short-term surplus. The current ratio divides assets by liabilities to express that relationship as a multiple, which is scale-free and easier to compare between companies of different sizes. A large firm may have huge working capital yet a thin current ratio, so viewing both gives the fullest picture.

What counts as current assets and liabilities?

Current assets are things expected to convert to cash within a year: cash and equivalents, accounts receivable, inventory and short-term investments. Current liabilities are obligations due within a year: accounts payable to suppliers, short-term loans, the current portion of long-term debt, accrued wages and taxes payable. The one-year test is what makes them current. Anything longer-term, such as property or a multi-year loan, sits outside working capital and does not belong in this calculation.

How can a business improve working capital?

Free up cash trapped in the short-term cycle. Collect receivables faster by invoicing promptly and chasing overdue accounts, reduce excess inventory so cash is not sitting on shelves, and negotiate longer payment terms with suppliers to hold cash longer. Avoid funding long-term assets with short-term debt. The aim is a comfortable but not wasteful cushion — enough to meet obligations and seize opportunities, without hoarding idle cash that could be earning a return elsewhere.