Working capital calculator

Published 9 Jul 20232 min read

If you want to run a successful business, then you need to effectively manage your cash flow to maintain financial health. Working capital must be as low as possible to improve your cash position. The key to controlling your stock levels is finetuning your purchasing volume with the sales trend and forecast data available to you.

Inventory value

Receivable from customers

Rebates from suppliers

Payables to suppliers

Working capital—

*The results are an estimate of your working capital. The information provided on this site is for illustrative purposes only. Because of its general nature the information cannot be taken as comprehensive and they do not constitute and should never be used as a substitute for legal, accounting, tax or professional advice specific to your business. We cannot guarantee that the information applies to the individual circumstances of your business. The calculations have been made based on the information you have provided. Always consult a qualified specialist before making any major financial decisions and check your decisions against your normal business methods and best practice in your field of business.

What is working capital?

Working capital is a representation of a company's ability to cover its liabilities with its assets. It provides investors with a view of the company's short-term financial stability. It also highlights whether a company can pay off debts and operate efficiently.

Effectively, it's the difference between assets and liabilities. The challenge business owners face is determining how to properly categorise liabilities and assets on the balance sheet. Can the company cover its short term debts? Is there a healthy amount of money to cover long term debt? Positive net working capital means a company will be able to meet short term liabilities and comfortably manage daily operations.

How to calculate working capital

You can't calculate working capital without the formula. You will find the working capital formula below.

Inventory value + accounts receivable from the customer + rebates from suppliers – payables to the suppliers = working capital. This is the formula you will need for calculating working capital, however, you can also use the working capital calculator to simplify the process.

If you want to use the net working capital formula it is simply the current assets – current liabilities. If you hold assets of 125,000 and liabilities of 100,000, your net working capital is 25,000. The difference between the two is net is a total, but working capital gets reported as a ratio.

How To Use The Calculator

The working capital Calculator makes the process simple and will help you effectively manage your cash flow with quick calculations to understand your working capital ratio. Using the calculator is as simple as inputting your figures for inventory value, accounts receivable inventory from customers, rebates from suppliers, and accounts payable to suppliers. The calculator will do the rest.

How QuickBooks Can Help

Having your financial information neatly organised and in one place can help in determining your business’s working capital. QuickBooks Accounting Software can help your business keep track of that information as well as provide you with great insights.