Working Capital Calculator

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.