Working Capital Calculator
Calculate net working capital and the current ratio from current assets and current liabilities, with a plain-language liquidity read. Educational. Runs in your browser.
Cash, receivables, inventory, prepaid — convertible within a year.
Payables, short-term debt, accrued expenses — due within a year.
Roughly 1.2–2.0 — generally healthy. Short-term assets comfortably cover short-term obligations.
Net working capital = current assets − current liabilities. It is the short-term capital funding day-to-day operations; positive means short-term assets exceed obligations. The current ratio (assets ÷ liabilities) puts it on a comparable scale. Healthy levels vary by industry — retailers run leaner than manufacturers. Educational; everything runs in your browser.
About this tool
Working capital is the money a business has tied up in funding its everyday operations, and it is one of the clearest gauges of short-term financial health. The headline figure, net working capital, is current assets minus current liabilities: current assets are things expected to turn into cash within a year — cash itself, accounts receivable, inventory, and prepaid expenses — while current liabilities are obligations due within a year, such as accounts payable, accrued expenses, and the current portion of debt. Positive working capital means a company's short-term assets more than cover its short-term obligations, giving it a buffer to pay suppliers, make payroll, and absorb a slow stretch without scrambling for financing. Negative working capital means the reverse and can be a warning sign — though some efficient, fast-turning businesses (think large retailers that collect from customers before paying suppliers) operate with little or even negative working capital by design. The current ratio expresses the same relationship as a multiple (current assets ÷ current liabilities), which makes it easy to compare across companies of different sizes: a ratio comfortably above 1.0 indicates obligations are covered, while a very high ratio can hint at cash or inventory sitting idle. As with most financial ratios, the right level is industry-dependent and most meaningful when tracked over time and against peers. This is educational. Everything runs in your browser; nothing is uploaded.
How to use it
- Add up current assets — cash, accounts receivable, inventory, and prepaid expenses — and enter the total.
- Add up current liabilities — accounts payable, accrued expenses, and short-term debt — and enter the total.
- Read net working capital (the dollar buffer) and the current ratio (the same thing as a multiple).
- Use the liquidity note to interpret whether the level looks comfortable or tight.
Frequently asked questions
- What is working capital?
- Net working capital = current assets − current liabilities. It is the short-term capital available to fund day-to-day operations. Positive working capital means short-term assets exceed short-term obligations.
- What is the current ratio?
- Current ratio = current assets ÷ current liabilities. It restates working capital as a multiple. A ratio above 1.0 means current assets cover current liabilities; many analysts view roughly 1.2–2.0 as healthy, though it varies by industry.
- Is negative working capital always bad?
- Not necessarily. It signals that current liabilities exceed current assets, which can be a liquidity risk — but some efficient businesses, like large retailers that collect cash before paying suppliers, run with negative working capital by design. Context and trend matter.
- What counts as a current asset or current liability?
- Current assets convert to cash within a year: cash, accounts receivable, inventory, prepaid expenses. Current liabilities are due within a year: accounts payable, accrued expenses, short-term debt, and the current portion of long-term debt.
- What is a good working capital level?
- There is no universal number. Capital-intensive manufacturers hold more working capital than asset-light service or retail businesses. Compare a company to its own history and to direct competitors rather than to a fixed target.
- Is anything uploaded?
- No. All calculations run entirely in your browser.