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Working Capital Calculator

Calculate working capital, the current ratio, and the quick ratio to understand short-term business liquidity.

Your Details

Overview

A working capital calculator helps you measure short-term liquidity by comparing current assets with current liabilities. Enter cash, accounts receivable, inventory, other current assets, and current liabilities to estimate working capital and key liquidity ratios.

How it works

The calculator adds your short-term assets to find total current assets. It then subtracts current liabilities to calculate working capital. The current ratio is calculated as current assets divided by current liabilities, while the quick ratio excludes inventory to show a more conservative view of short-term liquidity.

How to use this calculator

  1. 1Enter your cash and cash equivalent balance.
  2. 2Add accounts receivable expected to be collected soon.
  3. 3Include the value of inventory on hand.
  4. 4Enter any other current assets due within a year.
  5. 5Add total current liabilities due within a year.
  6. 6Review your working capital, current ratio, and quick ratio.

Example Calculation

Cash and cash equivalents

$25,000

Accounts receivable

$18,000

Inventory

$12,000

Other current assets

$5,000

Current liabilities

$40,000

Working capital

$20,000

With current assets of 60000 and current liabilities of 40000, estimated working capital is 20000. The current ratio is 1.50x and the quick ratio is 1.20x.

Frequently asked questions

What does a working capital calculator estimate?

It estimates the difference between current assets and current liabilities, along with common liquidity ratios such as the current ratio and quick ratio.

What is considered working capital?

Working capital is current assets minus current liabilities. It reflects the funds available to support day-to-day operations.

What is the current ratio?

The current ratio compares total current assets with current liabilities. A higher ratio generally suggests stronger short-term liquidity.

What is the quick ratio?

The quick ratio measures short-term liquidity without including inventory, which may take longer to turn into cash.

Why is inventory excluded from the quick ratio?

Inventory may not be converted into cash as quickly as cash or receivables, so excluding it gives a stricter view of liquidity.

Can working capital be negative?

Yes. Negative working capital means current liabilities are greater than current assets, which can indicate short-term liquidity pressure.

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Assumptions and warnings

Assumptions

  • All values entered are for the same reporting date or accounting period.
  • Current assets are expected to be used, sold, or converted to cash within 12 months.
  • Current liabilities are obligations due within 12 months.
  • The ratios are general liquidity indicators and do not reflect cash flow timing or credit terms.
  • Results are estimates based only on the amounts you enter.

Warnings

  • This calculator provides a general estimate only and is not accounting or financial advice.
  • Liquidity ratios should be reviewed alongside cash flow, payment terms, and the nature of the business.