Working Capital Calculator

The Working Capital Calculator shows how much short term financial cushion your business holds once it has covered the bills that fall due soon. You enter your current assets, the things you expect to turn into cash within a year such as bank balances, debtors and stock, and your current liabilities, the amounts you must pay within a year such as creditors, tax owing and the current part of any loans. The tool returns your working capital, which is current assets minus current liabilities, and your current ratio, which is current assets divided by current liabilities. Positive working capital means you have more short term resources than short term obligations, which is generally a sign of healthy day to day liquidity. The current ratio puts the same idea in proportional terms, so a ratio of 1.67 means you hold $1.67 of current assets for every $1 of current liabilities. Owners, bookkeepers, lenders and investors use these figures to judge whether a business can meet its near term commitments without scrambling for finance. A handful of sensible habits help you read the result well. Look at the trend over several reporting dates rather than a single snapshot, because a one off spike in stock or a large tax payment can distort a single figure. Remember that a very high ratio is not always good, since it can signal cash sitting idle or stock that is not selling. Aim for a comfortable buffer that suits your industry and your payment cycles, and pair this measure with a cash flow view so you can see timing as well as totals.

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Working capital = current assets - current liabilities. Current ratio = current assets / current liabilities. Estimate only, not financial or tax advice.