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Working Capital Calculator

Determine your exact daily cash requirements to keep your business operating smoothly.

Current Assets

What you own or are owed
Money customers owe you for sales made on credit.

Current Liabilities

What you owe within 12 months
Money you owe to suppliers for purchases.
Unpaid wages, utility bills, taxes, etc.

Current Ratio

1.9

Healthy

A ratio between 1.5 and 2.0 suggests a solid financial position.

Net Working Capital
Total Current Assets ₹ 26,00,000
Less: Current Liabilities - ₹ 13,50,000

Available Working Capital

₹ 12,50,000

You have sufficient short-term assets to cover your immediate debts.

Understanding Working Capital

Formula
Net Working Capital = Current Assets - Current Liabilities

Working capital is the difference between a company's current assets (cash, accounts receivable, inventories of raw materials and finished goods) and its current liabilities (accounts payable, short-term debt). It measures a company's operational efficiency and short-term financial health.

What the Current Ratio tells you

The current ratio (Current Assets ÷ Current Liabilities) is a liquidity ratio that measures your ability to pay short-term obligations.

• Ratio > 1.0: You have more assets than liabilities. Generally healthy.
• Ratio < 1.0: Negative working capital. You may face difficulties paying off immediate debts.
• Ratio > 2.0: While secure, it might indicate you are not investing your excess cash or inventory efficiently.

Frequently Asked Questions

Working Capital = Current Assets - Current Liabilities. It measures a company's short-term liquidity and operational efficiency. Positive working capital means the company can pay its short-term obligations; negative indicates potential cash flow problems.
A current ratio (Current Assets / Current Liabilities) between 1.5 and 3 is generally considered healthy. Below 1 indicates potential liquidity issues. Above 3 may suggest inefficient use of assets. The ideal ratio varies by industry.
The Quick Ratio (Acid Test) = (Current Assets - Inventory) / Current Liabilities. It excludes inventory because it may not be quickly convertible to cash. A quick ratio of 1 or above is considered good.
Improve working capital by: collecting receivables faster, negotiating longer payment terms with suppliers, reducing excess inventory, converting short-term debt to long-term, improving sales, and managing cash flow more efficiently.
Poor working capital management leads to cash crunches, inability to pay suppliers/employees, missed growth opportunities, and potential business failure. It's especially critical for MSMEs and startups where cash reserves are limited.