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A 120,000 cushion and a 3 times current ratio
Enter 40,000 cash, 45,000 of receivables, 90,000 of inventory, and 5,000 of other current assets. On the other side, 35,000 of payables and 25,000 of other current liabilities. Current assets are 180,000. Current liabilities are 60,000.
Cash and equivalents: 25% lower
Change cash and equivalents to 30,000 while keeping the other example values the same.
Cash and equivalents: 25% higher
Change cash and equivalents to 50,000 while keeping the other example values the same.
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Quick answer
What does the Working capital ratio calculate?
How much working capital is left after current debts, and what is the current ratio? This calculator uses cash and equivalents, accounts receivable, inventory, other current assets, accounts payable, and other current liabilities to estimate current assets after current debts immediately in your browser.
With the values currently entered, the result is $120,000.00 — working capital. It also shows current ratio, quick ratio, current assets, and current liabilities.
How to use the Working capital ratio
- Replace the example values with your own numbers.
- Review the result and supporting figures as they update automatically.
- Check the formula and assumptions before using the estimate for a decision.
Inputs used
- Cash and equivalents
- Accounts receivable
- Inventory
- Other current assets
- Accounts payable
- Other current liabilities
Working capital ratio formula
Working capital = current assets − current liabilities. Current ratio = current assets ÷ current liabilities. Quick ratio = (current assets − inventory) ÷ current liabilities.
Assumptions
- The SBA glossary defines current assets as cash, receivables, inventory, and other items that could convert to cash in less than one year, current liabilities as amounts due within one year, and working capital as current assets left after current debts are paid.
- An SEC computation of ratios exhibit writes the current ratio as current assets divided by current liabilities at the balance-sheet date. The quick line removes inventory from that coverage test.
Verify the inputs
Authoritative sources
These sources explain the definitions, factors, or rules behind this tool. Their geographic scope is shown because an official source for one country is not automatically valid somewhere else.
Defines current assets, current liabilities, working capital, Days Receivable, Days Payable, GPM%, and break-even analysis from fixed cost, variable cost, and profit.
Computation of ratiosUS Securities and Exchange CommissionScope: SEC-filed ratio definitions; method is generalWrites the current ratio as current assets divided by current liabilities, and inventory turnover as total cost of sales divided by average inventory (beginning plus ending, divided by two).
Sources do not endorse Calculum. Check the source date, scope, and your own documents before making a financial, tax, insurance, or reporting decision.
Practical guide
Working capital ratio example and edge cases
Working capital is current assets minus current debts. The SBA glossary says that in those words: current assets left after current debts are paid. The current ratio is the same two totals as a coverage multiple. An SEC exhibit writes it as current assets divided by current liabilities.
Example: A 120,000 cushion and a 3 times current ratio
Enter 40,000 cash, 45,000 of receivables, 90,000 of inventory, and 5,000 of other current assets. On the other side, 35,000 of payables and 25,000 of other current liabilities. Current assets are 180,000. Current liabilities are 60,000.
- Cash and equivalents
- 40,000
- Accounts receivable
- 45,000
- Inventory
- 90,000
- Other current assets
- 5,000
- Accounts payable
- 35,000
- Other current liabilities
- 25,000
Calculated result$120,000.00working capital
Working capital is 120,000. The current ratio is 3. The quick ratio drops inventory and lands at 1.5. If you want months of cash at the current burn, open the cash runway calculator.
Example results use the default display profile. The calculator above follows your selected country and units.
How to read the result
- Read the dollar cushion first. Then check the current ratio. A ratio above 1 means current assets cover amounts due inside a year on this snapshot.
- The quick line removes inventory. That is the tighter test when stock is slow to sell.
Edge cases worth checking
A line of credit is unused
Unused credit is not a current asset on this snapshot. It can still pay a bill. Keep it in your head, not in the cash box, unless the lender already funded it.
Payroll hits in three days
Current liabilities include what is due inside a year, not only what is due this week. If the next payroll is unpaid, add it to other current liabilities so the cushion is honest.
What changes the result most
Cash and equivalents
Use a current amount for cash and equivalents. Include fees or recurring costs that belong in the same figure.
Accounts receivable
Use a current amount for accounts receivable. Include fees or recurring costs that belong in the same figure.
Inventory
Use a current amount for inventory. Include fees or recurring costs that belong in the same figure.
Try a different scenario
Small changes show whether the answer is stable or sensitive.
Cash and equivalents: 25% lower
30,000$110,000.00working capital
Cash and equivalents: 25% higher
50,000$130,000.00working capital
Accounts receivable: 25% higher
56,250$131,250.00working capital
Common mistakes
Check cash and equivalents
The SBA glossary defines current assets as cash, receivables, inventory, and other items that could convert to cash in less than one year, current liabilities as amounts due within one year, and working capital as current assets left after current debts are paid. Make sure this matches the number you enter.
Keep other current liabilities consistent
An SEC computation of ratios exhibit writes the current ratio as current assets divided by current liabilities at the balance-sheet date. The quick line removes inventory from that coverage test. Use the same units and time period throughout the calculation.
Do not rely on one working capital ratio scenario
Run a cautious case and an optimistic case. The range is often more useful than one exact-looking number.
Use this result well
How much working capital is left after current debts, and what is the current ratio?
It does not replace a quote, contract, accountant, or local employment guidance.