Working capital, current ratio and quick ratio from the current section of a balance sheet.
Shows the change in working capital and its effect on cash.
Example Result
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Estimates for planning only; not financial, tax or investment advice. See our Disclaimer.
Working capital is what a business would have left if it turned its current assets — cash, receivables, inventory — into cash and paid every bill due within a year. It is the first number a lender, supplier or investor checks to see whether a company can meet its short-term obligations without new financing. Enter total current assets and total current liabilities, or leave the totals blank and fill in the breakdown; the calculator returns working capital and the current ratio, the quick ratio when you enter inventory, and the change against a prior period if you have one. The guide below explains what belongs in each line, why the quick ratio leaves inventory out, why negative working capital is normal for some businesses, and how a change in working capital shows up in the cash flow statement.
Enter total current assets and total current liabilities for a quick result.
Or leave the totals blank and fill in the breakdown — totals are calculated automatically, and inventory and cash add the quick and cash ratios.
Optionally enter last period's working capital to see the change and its cash effect.
Compare the result with the company's own history and with peers; no single ratio is good everywhere.
By O.E. — Partner, chairman of the board and CEO of a metal products manufacturer for 21 years; the company exports to 45 countries.
Drafted with AI assistance; calculations checked against primary sources and tested with the site's own code. About FlowUtil
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"Current" means expected to turn into cash, or to be paid, within one year of the balance-sheet date. Working capital = current assets − current liabilities; the current ratio divides instead of subtracting; the quick ratio leaves out inventory, which may take months to sell; the cash ratio keeps only cash. The current portion of long-term debt — principal due in the next twelve months — is a current liability even though the loan itself is long-term.
| Symbol | Meaning |
|---|---|
| Current assets | Cash + receivables + inventory + other current assets |
| Current liabilities | Payables + short-term debt + other current liabilities |
| Quick ratio | (Current assets − Inventory) ÷ Current liabilities |
| Cash ratio | Cash ÷ Current liabilities |
1$250,000 of current assets, $180,000 of current liabilities.
250,000 − 180,000; 250 ÷ 180
Working capital $70,000 · current ratio 1.39
A short-term buffer.
2Breakdown: cash $50,000, receivables $120,000, inventory $80,000 | payables $90,000, short-term debt $40,000, other $20,000; prior period $85,000.
250,000 − 150,000; (250 − 80) ÷ 150; 50 ÷ 150
Working capital $100,000 · current 1.67 · quick 1.13 · cash 0.33 · change +$15,000
Even without the inventory the business could pay its current bills from cash and receivables. The $15,000 rise in working capital absorbed cash.
3$60,000 against $75,000.
60,000 − 75,000
Working capital −$15,000 · current ratio 0.80
A warning for a manufacturer waiting 60 days to be paid; normal for a supermarket or restaurant, where customers pay on the day and suppliers on 30-day terms.
Analysts often strip out the financing items to see the working capital tied up in day-to-day trading: operating working capital = receivables + inventory − payables. In the breakdown example: 120,000 + 80,000 − 90,000 = $110,000. That is the cash the business has to fund to keep selling; it grows with sales, and the cash conversion cycle (days of inventory + days of receivables − days of payables) measures how long each dollar stays tied up.
If working capital was $85,000 last year and $100,000 this year, the $15,000 increase absorbed cash: more money is sitting in receivables or stock. In the indirect cash flow statement, an increase in working capital is subtracted from net income on the way to operating cash flow; a decrease adds to it. That is why a growing, profitable company can still run short of cash — and why free cash flow starts from operating cash flow, not profit.