Working Capital Calculator
Enter what your business owns and owes over the next 12 months. You get net working capital, the current ratio and the quick ratio, plus what they mean for your cash cushion. Nothing you type leaves your browser.
How this calculator works
Net working capital is current assets minus current liabilities: the cash and near-cash you have left after covering everything due within a year. The current ratio divides the same two numbers, so you can compare businesses of different sizes. The quick ratio leaves out inventory and prepaid items, counting only cash and receivables, because inventory can take months to turn back into cash.
Many healthy small businesses keep a current ratio somewhere between 1.2 and 2.0. Below 1.0, bills due this year are larger than the assets available to pay them. Well above 2.0 can mean cash sitting idle that could be paying down expensive debt or funding growth. The right range depends on your industry: a business that collects at the register can run tighter than one waiting 60 days on invoices.
Where to find these numbers
Your balance sheet lists all of them. In most accounting software it's under Reports, then Balance Sheet. Use one date for every figure, ideally the end of last month. If you don't keep a balance sheet yet, use today's bank balance, your unpaid invoices list, and your unpaid bills.
Improving a weak result
- Collect faster: shorter payment terms, deposits on large jobs and automated reminders turn receivables into cash sooner. See how to improve collections.
- Pay on terms, not early: using the full payment window your suppliers give you keeps cash in the business longer. See negotiating vendor payment terms.
- Carry less inventory: stock you won't sell for months ties up cash without helping the quick ratio. See smarter inventory management.
- Refinance short-term debt: moving a balance from a card or short line to a longer-term loan lowers current liabilities. Compare options in what a line of credit is.
Common questions
A current ratio between roughly 1.2 and 2.0 is a common target for small businesses. It means you can cover short-term bills with some cushion left for a slow month, without so much cash sitting idle that it should be put to work. Businesses paid upfront can run lower; businesses waiting on long invoice terms usually need more.
Yes. Negative working capital means bills due within 12 months exceed the assets available to pay them. It is a warning sign for most small businesses, though some business models, such as subscription companies that collect cash before delivering, can run negative safely because cash arrives before costs do.
The current ratio counts every current asset, including inventory. The quick ratio counts only cash and receivables, since those turn into cash quickly. If your current ratio looks healthy but your quick ratio is below 1.0, much of your cushion is tied up in stock.
Monthly, right after you close your books, is a good rhythm. Check it before taking on a large order, signing a lease or borrowing, since each changes both sides of the calculation.
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