Working Capital Calculator

Working Capital & Liquidity Analysis

Working capital measures a business's operational liquidity and short-term financial health. It represents the difference between a company's current assets (cash, inventory, accounts receivable) and its current liabilities (accounts payable, short-term debt). Maintaining positive working capital ensures a company can fulfill debt obligations, cover payroll, and reinvest in growth without encountering cash flow constraints.

Working Capital & Current Ratio Formulas

Net working capital is calculated using the following straightforward equation:

$$\text{Working Capital} = \text{Current Assets} - \text{Current Liabilities}$$

To evaluate how efficiently assets cover liabilities as a proportion, analysts examine the Current Ratio:

$$\text{Current Ratio} = \frac{\text{Current Assets}}{\text{Current Liabilities}}$$

Explore related tools: check out our Working Capital Turnover Ratio Calculator, calculate with the Current Ratio Calculator, or use the Quick Ratio Calculator.