Working Capital Calculator
Working capital with the current and quick ratios. The quick ratio removes inventory, on the view that stock you cannot sell in a hurry is not much use when a bill falls due.
Also called: current ratio calculator, quick ratio.
$2,000,000.00 of working capital, a current ratio of 1.67. Stripping out inventory gives a quick ratio of 1.17, which is the tougher test.
An estimate, not an offer or a guarantee. Projected returns assume the rate you entered holds for the whole term, which no market does.
How this is calculated
Working capital is what is left of short-term assets after short-term obligations, and it is the buffer a business runs on. The current ratio expresses the same thing as a multiple, and the quick ratio repeats it without inventory. The gap between the two ratios is a measure of how much of the buffer depends on selling stock, which is exactly the assumption that fails in a downturn.
working capital = current assets - current liabilities- CA
- Current assets (currency)
- CL
- Current liabilities (currency)
Method and limits
What it assumes
- Current means realisable or payable within a year.
What it deliberately does not model
- Very high working capital is not automatically good: it can mean cash sitting idle or receivables not being collected.
- Seasonal businesses show wildly different figures depending on the date.
Formula version 1.0.0 · definition 1.0.0 · United States · Report a problem with this calculator
Frequently asked questions
- What current ratio should I aim for?
- Around 1.5 to 2 is a common comfort zone, but it varies enormously by industry. A supermarket runs happily below 1 because it collects cash before paying suppliers.