Working Capital Ratio Calculator

How it is calculated

Two figures come from the same pair of balance-sheet totals:

ratio = current assets / current liabilities and net working capital = current assets − current liabilities

Current assets are cash, receivables, inventory and anything else expected to turn into cash within a year; current liabilities are the debts and bills due within the same period. Enter both in the same currency and the same period. The ratio is shown with two decimals and the net figure is displayed with a dollar sign for any currency. Liabilities must be above zero (a division by zero gives no result) and assets cannot be negative. A negative net working capital is shown with a minus sign.

Common mistakes

• Using total assets and total liabilities from the balance sheet: only the current (due or convertible within a year) portions belong here.
• Leaving long-term loan instalments out: the part of a long-term loan due within twelve months counts as a current liability.
• Reading a ratio above 1 as proof of good liquidity when most of the assets are slow-moving inventory that cannot quickly become cash.
• Mixing currencies or periods between the two boxes, or entering liabilities as 0, which gives no result.