Working Capital Calculator

Why Working Capital Matters

Working capital measures a company’s short-term financial health — its ability to pay bills, manage operations, and handle emergencies. It’s the lifeblood of day-to-day business.

How to Use This Calculator

• Current Assets: Cash, receivables, inventory — anything convertible to cash within a year.
• Current Liabilities: Debts due within one year (payables, short-term loans, etc.).
• Enter values freely — we extract numbers from any format (e.g., 150k, $90,000).
• Click “Calculate” to see your working capital and current ratio.

Formulas Used

Example: $150K assets, $90K liabilities →
Working Capital = 150,000 − 90,000 = $60,000
Current Ratio = 150,000 / 90,000 = 1.67 → Healthy

Interpreting the Results

Real-World Applications

• Small Businesses: Ensure you can pay rent, payroll, and suppliers
• Startups: Monitor runway and cash flow during growth phases
• Lenders: Assess creditworthiness before approving loans
• Investors: Evaluate financial stability of potential investments
• Seasonal Businesses: Plan for low-revenue periods

Tips to Improve Working Capital

• ✅ Speed up receivables — offer early payment discounts
• ✅ Negotiate longer payables — extend terms with suppliers
• ✅ Reduce excess inventory — free up cash
• ✅ Use a line of credit for temporary shortfalls
• ✅ Monitor cash flow weekly — catch issues early

Advanced Use: Operating Cycle

Combine working capital with:

• Days Sales Outstanding (DSO) — how fast you collect receivables
• Days Inventory Outstanding (DIO) — how long inventory sits
• Days Payable Outstanding (DPO) — how long you take to pay bills

Net Operating Cycle = DSO + DIO − DPO
A shorter cycle means faster cash generation.