What is my working capital?
Enter the current assets and current liabilities from a balance sheet. You get the working capital, which is what would be left after paying the debts due within a year, and the current ratio.
- Working capital
- $100,000.00
Current assets of $200,000.00 less current liabilities of $100,000.00 leave working capital of $100,000.00.
- Current ratio
- 2
Working capital: $100,000.00. Current assets of $200,000.00 less current liabilities of $100,000.00 leave working capital of $100,000.00.
The results are estimates for information only. They are not financial, tax, or legal advice. Check the numbers with your lender or a qualified professional before you decide. Terms of use
How to calculate
Computes working capital, current assets minus current liabilities, and the current ratio.
Example with the default inputs (Current assets $200,000.00, Current liabilities $100,000.00): Current assets of $200,000.00 less current liabilities of $100,000.00 leave working capital of $100,000.00.
Method: Working capital = current assets − current liabilities. Current ratio = current assets ÷ current liabilities (no ratio when the liabilities are $0).
- Both amounts come from the same balance sheet.
- Arithmetic is exact on the typed decimals; money shows to the cent and the ratio to 2 decimals, halves up.
Worked examples
Each example is checked against the calculator on every build.
- Current assets $200,000.00, Current liabilities $100,000.00 gives Working capital $100,000.00, Current ratio 2.Source: U.S. Securities and Exchange Commission, Beginners' Guide to Financial Statements (working capital = current assets − current liabilities). https://www.sec.gov/about/reports-publications/beginners-guide-financial-statements; OpenStax, Principles of Finance, 6.3 Liquidity Ratios (current ratio = current assets ÷ current liabilities; Clear Lake Sporting Goods, $200,000 ÷ $100,000 = 2). https://openstax.org/books/principles-finance/pages/6-3-liquidity-ratios
- Current assets $85,000.00, Current liabilities $120,000.00 gives Working capital -$35,000.00, Current ratio 0.708333.Source: U.S. Securities and Exchange Commission, Beginners' Guide to Financial Statements (working capital = current assets − current liabilities). https://www.sec.gov/about/reports-publications/beginners-guide-financial-statements
- Current assets $15,250.50, Current liabilities $0.00 gives Working capital $15,250.50.Source: U.S. Securities and Exchange Commission, Beginners' Guide to Financial Statements (working capital = current assets − current liabilities). https://www.sec.gov/about/reports-publications/beginners-guide-financial-statements
How it works
- Working capital = current assets − current liabilities
- Current ratio = current assets ÷ current liabilities
Rules:
- Both amounts are $0 or more, at most $1 quadrillion.
- When current liabilities are $0, there is no current ratio; only working capital shows.
- A ratio too large or too small to show as a number gives no answer.
- The arithmetic is exact on the decimals you type. Money shows to the cent and the ratio to 2 decimals, with halves rounded up.
Assumptions
- Both amounts come from the same balance sheet date.
Worked examples by hand
Clear Lake Sporting Goods. Current assets $200,000, current liabilities $100,000. Working capital = 200,000 − 100,000 = $100,000. Current ratio = 200,000 ÷ 100,000 = 2.
More due than on hand. Current assets $85,000, current liabilities $120,000. Working capital = 85,000 − 120,000 = −$35,000. Current ratio = 85,000 ÷ 120,000 = 0.71 (0.7083…).
No current liabilities. Current assets $15,250.50, current liabilities $0. Working capital = $15,250.50, and there is no current ratio.
Other questions people ask
What is working capital?
Working capital is the money a company would have left if it paid all of its current liabilities, the debts due within a year, out of its current assets. It shows whether the business can cover its short-term bills.
How do I calculate working capital?
Subtract current liabilities from current assets. Clear Lake Sporting Goods had $200,000 of current assets and $100,000 of current liabilities, so its working capital was $100,000.
What counts as current assets and current liabilities?
Current assets are things a company expects to turn into cash within a year: cash, short-term investments, accounts receivable and inventory. Current liabilities are debts due within a year: accounts payable, wages, taxes owed and the part of loans due this year.
Can working capital be negative?
Yes. With $85,000 of current assets and $120,000 of current liabilities, working capital is −$35,000. More is due within the year than the current assets cover, so the company may need to borrow or collect cash faster.
What is the difference between working capital and the current ratio?
Both use the same two numbers. Working capital subtracts them and gives a dollar amount. The current ratio divides them, which makes companies of different sizes easier to compare. Positive working capital always means a current ratio above 1.
Why is there no current ratio when liabilities are $0?
The current ratio divides by current liabilities, and nothing can be divided by $0. The working capital still shows.