Working Capital Calculator
Free working capital calculator. Enter current assets and current liabilities to get net working capital and current ratio — a quick liquidity check.
About the Working Capital Calculator
A working capital calculator that measures a business's short-term liquidity: net working capital (current assets minus current liabilities) and the current ratio.
Working capital is the money a business has available to run its day-to-day operations: net working capital = current assets − current liabilities. Current assets are what you own that converts to cash within a year (cash itself, customer receivables, inventory); current liabilities are what you must pay within a year (supplier dues, short-term borrowings, taxes payable). Positive working capital means you can pay what's coming due; negative means a cash crunch is scheduled unless something changes.
The companion figure is the current ratio — current assets ÷ current liabilities. A ratio around 1.5 to 2 is conventionally healthy for most trading and manufacturing businesses: enough cushion to absorb late-paying customers or slow-moving stock without missing supplier payments. Below 1, obligations exceed near-term resources; far above 2 can actually signal inefficiency — cash sitting idle or inventory piling up instead of working.
Profitable companies fail on working capital surprisingly often: sales grow, but the cash is trapped in receivables and stock while salaries and suppliers must be paid now. Watch the trend monthly, not just the level. The practical levers are collecting receivables faster (shorter credit periods, payment reminders — see the payment reminder generator), negotiating longer supplier terms, and right-sizing inventory. Banks assess exactly these numbers when pricing working-capital loans and cash-credit limits, so knowing yours before the meeting puts you ahead.
How to use the Working Capital Calculator
- Enter your basic details in the fields provided.
- Select the appropriate options from the dropdowns.
- View your precise calculation results instantly.
Worked example
₹12,00,000 current assets and ₹8,00,000 current liabilities → net working capital ₹4,00,000 and a current ratio of 1.5 — in the conventionally healthy 1.5–2 range.
Formula
Net working capital = current assets − current liabilities. Current ratio = current assets ÷ current liabilities.Frequently asked questions
- What counts as current assets and current liabilities?
- Current assets: cash and bank balances, accounts receivable, inventory, short-term investments and prepaid expenses — anything expected to convert to cash within 12 months. Current liabilities: accounts payable, short-term loans and overdrafts, taxes payable, and the portion of long-term debt due within the year.
- What is a good current ratio?
- Roughly 1.5–2 for most businesses. Below 1 signals liquidity stress; well above 2 may mean idle cash or bloated inventory. Norms vary by industry — fast-turnover retailers run leaner than manufacturers.
- Can a profitable business have negative working capital?
- Yes — profit is an accounting result, cash is a timing reality. If customers pay in 90 days but suppliers demand 30, growth itself consumes cash. Some models (supermarkets, subscriptions) deliberately run negative working capital because customers pay upfront.
- Is my financial data secure?
- Absolutely. All calculations happen entirely in your browser and none of your inputs are saved or sent to any server.
- Can I use this for official tax filing?
- While highly accurate for planning and estimation, always consult your CA or tax professional for final official filings.
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