Evaluate liquidity, operational efficiency, and short-term financial health.
Current Financial Position
Cash, inventory, receivables, and other short-term assets.Short-term debts and obligations.Money expected from customers.Money owed to suppliers.Stock held for sale or production.Ideal ratio (commonly 1.5–2.0).
Calculate to view summary.
What Is Working Capital?
Working capital measures a company’s ability to meet short-term obligations
using its short-term assets.
Formula:
Working Capital = Current Assets − Current Liabilities
A higher ratio indicates better liquidity, but too much idle capital
may reduce efficiency.
What is a good working capital ratio? Between 1.5 and 2.0 is generally healthy.
Can working capital be negative? Yes, but it may indicate liquidity risk.
Is inventory always liquid? No, slow-moving inventory reduces flexibility.
