Working Capital Calculator
See how much short-term liquidity your business has. Enter your current assets and current liabilities to get your working capital, current ratio, and a plain-English verdict on your financial health — instantly.
How the working capital calculator works
Working capital is one of the clearest signals of a business's short-term health. It tells you whether you have enough liquid resources to cover the bills, payroll, and obligations coming due in the next year. This tool computes both your working capital and your current ratio from two simple inputs.
Current ratio = Current Assets ÷ Current Liabilities (shown as “—” when liabilities are zero).
For example, a business with $300,000 in current assets and $200,000 in current liabilities has $100,000 of working capital and a current ratio of 1.5. That means it holds one and a half dollars of short-term assets for every dollar of short-term debt — enough to operate comfortably, with a modest cushion.
Reading your current ratio
- 2.0 and above — Healthy. You have ample assets to cover near-term liabilities. Very high ratios can occasionally mean idle cash that could be put to work.
- 1.0 to 1.99 — Adequate. You can cover obligations, but with less room for a surprise. Watch receivables and inventory closely.
- Below 1.0 — At risk. Your short-term debts exceed your short-term assets, which can lead to a cash crunch.
How to strengthen your working capital
- Collect receivables faster and tighten credit terms with customers.
- Manage inventory so cash is not tied up in unsold stock.
- Negotiate longer payment terms with suppliers to keep cash on hand.
- Use a line of credit for seasonal gaps rather than long-term debt.
Working capital works hand in hand with cash flow and coverage ratios. If your working capital is thin, check your cash flow and your DSCR before taking on new obligations — a healthy balance sheet makes financing easier and cheaper to obtain.
Frequently asked questions
What is working capital?
Working capital is current assets minus current liabilities. It measures the short-term liquidity available to run your business day to day. Positive working capital means you can cover near-term obligations; negative means you may struggle to.
What is a good current ratio?
A current ratio of 2 or higher is generally considered healthy, meaning you have twice the current assets to cover current liabilities. Between 1 and 2 is adequate, and below 1 signals you may not be able to cover short-term debts.
What counts as a current asset or liability?
Current assets are things you can turn into cash within a year, such as cash, accounts receivable, and inventory. Current liabilities are obligations due within a year, such as accounts payable, short-term loans, and accrued expenses.
How is the current ratio calculated?
The current ratio equals current assets divided by current liabilities. If liabilities are zero, the ratio is undefined and shown as a dash. Working capital, by contrast, is current assets minus current liabilities.
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This calculator is for educational and informational purposes only and does not constitute financial, accounting, or legal advice. Estimates are based on the values you enter. Consult a qualified accountant for a full assessment of your financial position.