Working Capital Calculator
Working capital is the difference between a firm's short-term assets and short-term liabilities; it is a core indicator of liquidity and short-term financial health.
This calculator computes working capital and related metrics from balance-sheet and operating-cycle inputs, then translates them into practical signals for cash management and financing decisions.
Inputs can be taken from the most recent balance sheet and operating metrics (days receivable, inventory days, days payable). Use consistent accounting periods (annual revenue paired with average days metrics).
Governance
Record 6e6b4ba7369e • Reviewed by Fidamen Standards Committee
Inputs
Results
Working Capital (Current Assets − Current Liabilities)
$40,000.00
Current Ratio (Current Assets ÷ Current Liabilities)
1.6667
Net Operating Cycle (Days)
75
Approximate Working Capital Need (Operating Cycle basis)
$246,575.34
Working Capital as % of Annual Revenue
333.33%
| Output | Value | Unit |
|---|---|---|
| Working Capital (Current Assets − Current Liabilities) | $40,000.00 | USD |
| Current Ratio (Current Assets ÷ Current Liabilities) | 1.6667 | — |
| Net Operating Cycle (Days) | 75 | days |
| Approximate Working Capital Need (Operating Cycle basis) | $246,575.34 | USD |
| Working Capital as % of Annual Revenue | 333.33% | — |
Visualization
Methodology
Primary working-capital calculation uses the standard balance-sheet definition: Working Capital = Current Assets − Current Liabilities. This is the liquidity buffer available to support operating needs.
Current Ratio is a common liquidity ratio showing coverage of short-term obligations: Current Ratio = Current Assets ÷ Current Liabilities. Ratios below 1 indicate liabilities exceed short-term assets.
To approximate cash needed to finance the operating cycle, we estimate the net operating cycle in days (receivables + inventory − payables) and multiply by average daily revenue: Approximate WC Need ≈ Net Operating Cycle Days × (Annual Revenue / 365). This is a heuristic widely used in cash-flow planning; it simplifies several balance-sheet flows into an actionable forecast.
Worked examples
Example: A small manufacturer with $150,000 current assets and $90,000 current liabilities has $60,000 working capital and a current ratio of 1.67. If its net operating cycle is 75 days and annual revenue is $1,000,000, the operating-cycle working-capital need ≈ 75 × (1,000,000 ÷ 365) ≈ $205,479.
Interpretation: Positive working capital and a current ratio above 1 suggest the firm can meet short-term obligations from current assets; however, a larger operating-cycle WC need than on-balance cash indicates potential liquidity pressure requiring financing, collection improvement, or inventory reduction.
F.A.Q.
Which inputs should I pull from financial statements?
Use the latest reported totals for current assets and current liabilities from the balance sheet. For receivables/inventory/payables days, use internal operational averages (rolling 12-month averages when possible) or calculate from AR, inventory, COGS, and AP using days formulas.
What if current liabilities are zero or near zero?
A zero current liabilities value will make the Current Ratio undefined; in practice, validate inputs and consider adding any short-term borrowings or accrued obligations to current liabilities. The tool does not automatically adjust for missing line items—enter conservative estimates when detail is incomplete.
How accurate is the 'Approximate Working Capital Need'?
This is an approximation based on the operating cycle and average daily revenue. It omits timing mismatches, seasonality, capital structure items, and non-operating working-capital sources. Use it as a planning guide, not a replacement for cash-flow forecasting.
Can this calculator replace a full cash-flow forecast?
No. This calculator gives quick liquidity and operating-cycle signals. For financing decisions, budgeting, or covenant compliance, prepare a detailed cash-flow forecast with week-by-week or month-by-month projections.
Regulatory or reporting guidance to consider?
For public companies, follow applicable financial-reporting rules and disclosures. Small businesses should follow guidance for liquidity planning from government small-business resources and check any lender covenant definitions when using denominated working-capital metrics.
How should I interpret Working Capital as a percent of revenue?
There is no single benchmark by industry; compare to peers or historical company norms. A rising percentage may indicate increasing capital intensity or slower collections; a declining percentage could reflect efficiency improvements or underinvestment in working capital.
Sources & citations
- U.S. Small Business Administration — Cash flow and working capital guidance — https://www.sba.gov
- U.S. Securities and Exchange Commission — Financial statement basics and liquidity ratios — https://www.sec.gov
- MIT OpenCourseWare — Corporate Finance and liquidity concepts — https://ocw.mit.edu
- Federal Reserve educational resources on business finance and liquidity — https://www.federalreserve.gov
- FASB — Financial Accounting Standards Board (GAAP) — https://www.fasb.org/
- SEC — Financial Reporting Manual — https://www.sec.gov/corpfin/cf-manual
- AICPA — American Institute of CPAs — https://www.aicpa-cima.com/
Further resources
Versioning & Change Control
Audit record (versions, QA runs, reviewer sign-off, and evidence).
Record ID: 6e6b4ba7369eWhat changed (latest)
v1.0.0 • 2025-11-28 • MINOR
Initial publication and governance baseline.
Why: Published with reviewed formulas, unit definitions, and UX controls.
Public QA status
PASS — golden 25 + edge 120
Last run: 2026-01-23 • Run: golden-edge-2026-01-23
Versioning & Change Control
Audit record (versions, QA runs, reviewer sign-off, and evidence).
What changed (latest)
v1.0.0 • 2025-11-28 • MINOR
Initial publication and governance baseline.
Why: Published with reviewed formulas, unit definitions, and UX controls.
Public QA status
PASS — golden 25 + edge 120
Last run: 2026-01-23 • Run: golden-edge-2026-01-23
Engine
v1.0.0
Data
Baseline (no external datasets)
Content
v1.0.0
UI
v1.0.0
Governance
Last updated: Nov 28, 2025
Reviewed by: Fidamen Standards Committee (Review board)
Credentials: Internal QA
Risk level: low
Reviewer profile (entity)
Fidamen Standards Committee
Review board
Internal QA
Entity ID: https://fidamen.com/reviewers/fidamen-standards-committee#person
Semantic versioning
- MAJOR: Calculation outputs can change for the same inputs (formula, rounding policy, assumptions).
- MINOR: New features or fields that do not change existing outputs for the same inputs.
- PATCH: Bug fixes, copy edits, or accessibility changes that do not change intended outputs except for previously incorrect cases.
Review protocol
- Verify formulas and unit definitions against primary standards or datasets.
- Run golden-case regression suite and edge-case suite.
- Record reviewer sign-off with credentials and scope.
- Document assumptions, limitations, and jurisdiction applicability.
Assumptions & limitations
- Uses exact unit definitions from the Fidamen conversion library.
- Internal calculations use double precision; display rounding follows the unit's configured decimal places.
- Not a substitute for calibrated instruments in regulated contexts.
- Jurisdiction-specific rules may require official guidance.
Change log
v1.0.0 • 2025-11-28 • MINOR
Initial publication and governance baseline.
Why: Published with reviewed formulas, unit definitions, and UX controls.
Areas: engine, content, ui • Reviewer: Fidamen Standards Committee • Entry ID: a38cff9bd8ec