What is Working Capital Calculator?
Calculate working capital, current ratio, quick ratio, and cash ratio to assess business liquidity and financial health Simply enter your values, and the calculator instantly computes accurate results using standard financial formulas. All calculations are performed entirely in your browser — nothing is stored or transmitted.
Formula Used
Positive working capital means business can meet short-term obligations. Current Ratio > 1.5 is healthy. Quick Ratio > 1 is ideal. Low ratios signal liquidity risk. Too high may indicate idle assets.
How to Use This Calculator
- Enter current assets: cash, bank balance, receivables, inventory, prepaid expenses
- Enter current liabilities: accounts payable, short-term loans, accrued expenses
- Click Calculate to see working capital, current ratio, and quick ratio
- Compare ratios with industry benchmarks
- Identify if business has a liquidity problem or excess idle funds
Worked Example
Current Assets: ₹50L (Cash ₹10L, Receivables ₹25L, Inventory ₹15L) | Current Liabilities: ₹30L → WC: ₹20L | Current Ratio: 1.67 | Quick Ratio: 1.17 (healthy)
Why Use This Tool?
- Assess if business can pay bills and obligations on time
- Identify cash flow problems before they become crises
- Benchmark liquidity ratios against industry standards
- Support bank loan applications with liquidity analysis
Frequently Asked Questions
What is Working Capital and why does it matter?
Working Capital = Current Assets − Current Liabilities. It represents the short-term financial cushion of a business. Positive working capital means you can pay current bills; negative working capital is a red flag indicating potential insolvency. Working capital management is critical for operational continuity.
What is a good current ratio for businesses?
A current ratio of 1.5-2.5 is generally healthy. Below 1 means current liabilities exceed current assets — dangerous territory. Above 3 may indicate inefficient use of assets (too much inventory or cash). Ideal ratio varies by industry: retail often operates at 1.0-1.5, while manufacturing prefers 2.0+.
How to improve working capital?
Improve receivables collection (reduce debtor days from 60 to 30). Negotiate longer payment terms with suppliers (extend creditor days from 30 to 45). Reduce inventory levels (just-in-time approach). Raise short-term funding (working capital loan, CC limit). Improve cash flow forecasting.
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