Working Capital Calculator
Calculate your business liquidity and cash flow health with industry benchmarks
Current Assets
Or enter individual components below
Current Liabilities
Or enter individual components below
Understanding Working Capital
What is Working Capital?
Working capital is a measure of your company's operational liquidity and short-term financial health. It represents the amount of cash and readily convertible assets available to fund day-to-day operations.
Formula:
Working Capital = Current Assets - Current Liabilities
Key Liquidity Ratios
Current Ratio
Current Assets ÷ Current Liabilities
Measures ability to pay short-term obligations
Quick Ratio
(Current Assets - Inventory) ÷ Current Liabilities
More conservative measure excluding inventory
Cash Ratio
Cash ÷ Current Liabilities
Most conservative liquidity measure
Positive Working Capital
- • ✅ Can meet short-term obligations
- • ✅ Indicates financial stability
- • ✅ Room for growth and investments
- • ✅ Better creditworthiness
- • ⚠️ Too much may indicate inefficient use of assets
Negative Working Capital
- • ❌ May struggle to pay bills
- • ❌ Potential cash flow problems
- • ❌ Limited growth opportunities
- • ⚠️ May be normal for certain industries
- • 🔍 Requires careful monitoring
Industry Variations
Retail/Manufacturing
Higher inventory needs more working capital
Service Companies
Lower inventory, potentially less working capital needed
Fast Food/Subscription
May operate with negative working capital efficiently
💡 Improving Working Capital
Increase Current Assets
- • Improve collection processes
- • Offer early payment discounts
- • Optimize inventory management
- • Increase sales and revenue
Manage Current Liabilities
- • Negotiate longer payment terms
- • Restructure short-term debt
- • Take advantage of vendor discounts
- • Consider asset-based financing