Working Capital Calculator
Working capital and the liquidity ratios that read it — current, quick and cash — plus how much of it is tied up in stock and unpaid invoices.
Working capital is current assets less current liabilities.
How the working capital calculator works
Working capital is current assets less current liabilities. The ratios split the same figures by how quickly the assets turn into cash: the current ratio counts everything, the quick ratio excludes inventory, and the cash ratio counts only cash.
The gap between the current and quick ratios is the whole diagnosis. A business at 2.1 current and 0.7 quick is not liquid; it is holding a warehouse.
Formula: working capital = current assets − current liabilities
Worked examples
| Inputs | Working capital | Note |
|---|---|---|
| A stock-heavy balance sheet | 490,000 | 1.98 current, 1.08 quick |
| Less inventory | 140,000 | the two ratios converge |
| More short-term debt | 40,000 | liquidity is strained |
FAQFrequently asked questions
What is a good current ratio?
Between 1.5 and 3. Below 1 means you cannot cover the year ahead from current assets; above 3 usually means capital is sitting idle.
Why exclude inventory from the quick ratio?
Because stock may not sell quickly, or at all, at the value on the books. The quick ratio asks what you could pay with if sales stopped tomorrow.
What does a big gap between the ratios mean?
That your liquidity is inventory. It is the single most useful thing these two numbers say together.
Is negative working capital always bad?
No. Supermarkets and some subscription businesses run it deliberately, because customers pay before suppliers do. It is bad when it is not deliberate.
Which ratio do lenders look at?
Current and quick, usually with a covenant attached. The cash ratio is rarely a covenant but it is what a receiver would look at.
Where these figures come from
- Corporate Finance Institute — EBITDA — why EBITDA is a non-GAAP measure with no single definition
- US SEC — Non-GAAP Financial Measures, Compliance & Disclosure Interpretations — the disclosure rules that exist precisely because EBITDA is not standardised
- Australian Securities and Investments Commission — the Australian corporate regulator
Last checked: September 2026. These are standard management-accounting definitions; where a term has no single agreed definition, the page says so.