Net Working Capital and Working Capital Ratio Calculator
Last Updated March 27, 2023
Working capital is the money that a company has available to manage its day-to-day operations. Used to pay a business’s short-term expenses, working capital is an important metric in determining the financial health and operational efficiency of a company.
To help you better understand what your net working capital and working capital ratio are, we have put together an easy-to-use calculator! All you need to find your key working capital metrics are your current assets and your current liabilities.
How to Use the Working Capital Calculator
The working capital calculator helps you quickly and easily determine your net working capital and working capital ratio. To calculate your key working capital metrics, input the following values and click the “Calculate” button:
- Current assets: These are your short-term assets. Current assets are expected to be used within one fiscal year or one operating cycle. Examples include cash, cash equivalents, and inventory.
- Current liabilities: These are your short-term debts, and they are meant to be paid off with your current assets within one fiscal year or one operating cycle. Examples include accounts payable and payroll taxes.
Once you click the “Calculate” button, you will receive the following outputs:
- Net working capital: Your net working capital (NWC) is a financial health metric that helps you understand your company’s ability to pay its short-term debts. Net working capital is calculated by subtracting your current liabilities from your current assets.
- Working capital ratio: Also called the current ratio, the working capital ratio compares your current assets and current liabilities and gives you an idea of your company’s liquidity and operational efficiency.
What is a Good Working Capital?
While there is no one-size-fits-all recommendation for net working capital and working capital ratio, you should have enough current assets available to cover your current liabilities. This means that you should strive to have a positive NWC and a working capital ratio that is greater than 1.
To learn more about how much working capital you need, check out our article.
Angela is the Director of Online Marketing at altLINE where she manages content production, marketing and sales operations, and digital PR. Angela joined altLINE in 2022 after several years of working in digital marketing across various industries including financial services and B2B. Angela loves creating content that helps readers better understand their financing options and helps them make informed decisions about factoring. Her work has been featured in publications like Search Engine Journal and Moz.
