Business
Working Capital Calculator
Works working capital, which is not the same thing as cash.
Result
Receivables are counted at face value. In contracting, a large share of receivables sitting past 60 days makes the current ratio look far healthier than the bank balance feels.
Get a Free Business AuditHow the calculation works
Current assets less current liabilities. The figure measures whether short-term obligations are covered by short-term resources, and because inventory and receivables count as current assets a business can show healthy working capital while having no cash at all.
What moves the number
- Receivables and how quickly they convert.
- Inventory and whether it is genuinely saleable.
- Payables and when they fall due.
- Short-term debt within current liabilities.
Where this one goes wrong
Working capital tied up in slow receivables and unsaleable inventory is not working, which means the figure can look comfortable while the business cannot meet payroll, and that is the gap the quick ratio and the cash position reveal. Look at the composition, not just the total. Inventory that has aged past the point of being saleable is the most common overstatement, and it inflates working capital until somebody writes it down.
Before you quote
- Examine the composition, not just the total.
- Assess whether inventory is genuinely saleable.
- Look at the cash position alongside working capital.
Questions
About this calculator
Is working capital the same as cash?
No. Inventory and receivables count as current assets, so a business can show healthy working capital with no cash at all. That gap is exactly where businesses with good balance sheets fail to meet payroll.
What makes working capital misleading?
Slow receivables and aged inventory, both of which count at full value until someone writes them down. Examining the composition rather than the total is what reveals whether the working capital is actually working.
How much working capital does a business need?
Enough to cover the gap between paying for things and being paid for them, which depends entirely on the cycle. A business paying suppliers in thirty days and collecting in ninety needs far more than one collecting at the point of sale.
Put this calculator on your site
Free to embed. Paste this where you want it to appear. It stays up to date automatically because it loads from BDEVY.
Please keep the attribution line. It is the only thing we ask in return.
How to use this calculator
- Cash and bank ($). Enter your own figure; the page starts at $45,000.
- Accounts receivable ($). Invoices issued but not yet paid.
- Inventory and materials on hand ($). Enter your own figure; the page starts at $32,000.
- Accounts payable ($). Enter your own figure; the page starts at $54,000.
- Short-term debt and accruals ($). Enter your own figure; the page starts at $38,000.
The result updates as you type, so you can try a figure, see what it does to working capital, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Cash and bank | $45,000 |
| Accounts receivable | $88,000 |
| Inventory and materials on hand | $32,000 |
| Accounts payable | $54,000 |
| Short-term debt and accruals | $38,000 |
What comes out
| Result | Value |
|---|---|
| Working capital main result | $73,000 |
| Current ratio | 1.8× |
| Quick ratio | 1.4× |
| Current liabilities | $92,000 |
Working capital of $73,000 and a current ratio of 1.8×, short-term assets cover short-term obligations.
How sensitive the answer is
Holding everything else steady and changing only cash and bank, this is what happens to working capital. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Cash and bank ($) | Working capital |
|---|---|
| $22,500 | $50,500 |
| $33,750 | $61,750 |
| $45,000 example above | $73,000 |
| $67,500 | $95,500 |
| $90,000 | $118,000 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Cash and bank ($)
- A money amount, starting at $45,000.
- Accounts receivable ($)
- Invoices issued but not yet paid.
- Inventory and materials on hand ($)
- A money amount, starting at $32,000.
- Accounts payable ($)
- A money amount, starting at $54,000.
- Short-term debt and accruals ($)
- A money amount, starting at $38,000.
What the results tell you
| Result | What it is |
|---|---|
| Working capital | The headline result. A money figure. |
| Current ratio | A number. |
| Quick ratio | A number. |
| Current liabilities | A money figure. |
Where these figures usually mislead
Business calculations assume the inputs are steady. Seasonality, a few large customers, and slow payment all break that assumption. A figure that looks healthy annually can still leave you short in a given month.
Keep going
Related calculators
Cash Flow Calculator
Works cash flow, which is a different statement from profit.
Open calculatorRunway Calculator
Works runway, where the constant-burn assumption is the weakness.
Open calculatorInvoice Calculator
Builds an invoice total, where the terms matter as much as the arithmetic.
Open calculatorGood numbers still need customers
BDEVY builds the marketing, websites, CRM and automation that turn a healthy spreadsheet into a busy schedule. The audit is free and you keep the findings.