Working Capital Calculator
Working capital is the cash cushion left after covering short-term obligations: current assets minus current liabilities. It funds day-to-day operations and absorbs shocks.
- Net working capital
- $150,000.00
- Current ratio
- 2.5
How it works
Working Capital = Current Assets - Current Liabilities
Add up current assets (cash, receivables, inventory, anything convertible to cash within a year) and subtract current liabilities (payables, credit cards, short-term debt, accrued expenses).
The calculator also shows the current ratio (current assets divided by current liabilities), which expresses the same position as a multiple so businesses of different sizes can be compared.
Worked example
A company with $250,000 in current assets and $100,000 in current liabilities has $150,000 of working capital and a current ratio of 2.5.
A current ratio between 1.5 and 2.0 is considered healthy for most small businesses; below 1.0 means current liabilities exceed the assets available to pay them.
Frequently asked questions
- What is a good working capital level?
- Positive, and enough to cover one to two months of operating expenses. The current ratio version: 1.5 to 2.0 is a comfortable range for most businesses.
- Can working capital be too high?
- Yes. A very high ratio can mean idle cash, bloated inventory, or uncollected receivables that could be working harder for the business.
- What is negative working capital?
- Current liabilities exceed current assets. Some models (subscriptions, fast-turn retail) run fine that way, but for most firms it is a liquidity warning.
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