Positive working capital means a company can cover its short-term obligations. Too much working capital may mean cash is tied up in inventory or receivables.
How to use the Working Capital Calculator
- Cash
- Accounts receivable
- Inventory
- Other current assets
- Accounts payable
- Short-term debt
- Other current liabilities
- Annual revenue
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter cash, receivables, inventory, other current assets, payables, short-term debt and other current liabilities.
Tips
- Use consistent periods (a year or a quarter) for flow figures and period-end values for balances.
- Average opening and closing balances when a ratio mixes a flow with a stock.
- Benchmark against competitors in the same industry.
- Read the ratio together with others – profitability, liquidity and efficiency tell different stories.
Common mistakes to avoid
- Using sales instead of cost of goods sold for inventory ratios.
- Mixing gross, operating and net profit.
- Ignoring one-off items that distort a single year.
Inputs explained
| Field | What to enter |
|---|---|
| Cash | Amount in your currency |
| Accounts receivable | Amount in your currency |
| Inventory | Amount in your currency |
| Other current assets | Amount in your currency |
| Accounts payable | Amount in your currency |
| Short-term debt | Amount in your currency |
| Other current liabilities | Amount in your currency |
| Annual revenue | Amount in your currency |
What each result means
- Current assets = [Cash] + [Accounts receivable] + [Inventory] + [Other current assets]
- Current liabilities = [Accounts payable] + [Short-term debt] + [Other current liabilities]
- Working capital = [Current assets] – [Current liabilities]
- Current ratio = [Current assets]÷[Current liabilities]
- Working capital as a share of revenue = [Working capital]÷[Annual revenue]×100
Example values
How the main result changes when Cash changes and everything else stays at the example values above:
| Cash | Working capital |
|---|---|
| 75,000 | 205,000 |
| 112,500 | 242,500 |
| 150,000 | 280,000 |
| 187,500 | 317,500 |
| 225,000 | 355,000 |
| 300,000 | 430,000 |
Formula
Working capital = current assets − current liabilitiesCurrent ratio = current assets ÷ current liabilitiesWorked example
Inputs — Cash: $150,000; Accounts receivable: $220,000; Inventory: $180,000; Other current assets: $30,000; Accounts payable: $160,000; Short-term debt: $80,000; Other current liabilities: $60,000; Annual revenue: $2,000,000.
Results — Current assets = $580,000.00; Current liabilities = $300,000.00; Working capital = $280,000.00; Current ratio = 1.93; Working capital as a share of revenue = 14 %.
Frequently asked questions
What is working capital?
Current assets minus current liabilities.
Is negative working capital bad?
Not always – some retailers operate with negative working capital.
How can a company improve working capital?
Collect receivables faster, cut inventory and extend payables.
What formula does the Working Capital Calculator use?
Working capital = current assets − current liabilities.