Working Capital Calculator
Measure your business's short-term financial health. Calculate net working capital and current ratio.
Current Assets
What you own that converts to cash within a year
Current Liabilities
What you owe within a year
Your result
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What is working capital?
Working capital is the money available to run your day-to-day operations. It's calculated as Current Assets minus Current Liabilities. Positive working capital means you can comfortably cover short-term obligations; negative working capital signals a potential cash crunch. It's one of the most important indicators of business health — many profitable businesses fail simply because they run out of working capital.
Understanding the current ratio
The current ratio (Current Assets ÷ Current Liabilities) tells you how easily you can pay your short-term debts:
- Below 1.0: Risk — you may struggle to meet short-term obligations
- 1.0 to 1.5: Adequate, but watch your cash flow closely
- 1.5 to 3.0: Healthy — comfortable liquidity
- Above 3.0: Very liquid, but you may be holding idle assets that could be reinvested
How to improve working capital
- Collect receivables faster — tighten payment terms with customers
- Negotiate longer payment terms with suppliers
- Reduce excess inventory tying up cash
- Use the MSME 45-day payment rule to get paid faster from larger buyers
- Arrange a working capital loan or cash credit facility for buffer
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