Working capital is the simplest measure of short-term financial health a business has: what it can turn into cash soon, minus what it owes soon.
How it works
Current assets — cash, receivables, inventory — minus current liabilities — payables, short-term debt — leaves working capital. Positive means short-term obligations are covered by short-term resources; negative means they aren’t, regardless of how the business looks on a longer-term basis.
How to use this calculator
- Enter current assets and current liabilities from a balance sheet.
A worked example
Current assets $150,000 minus current liabilities $90,000 → $60,000 in working capital.
Current assets $80,000 minus liabilities $100,000 → −$20,000 — negative working capital, meaning short-term obligations exceed short-term assets.
What the variables mean
| Variable | Meaning |
|---|---|
| Current assets | Cash and assets convertible to cash within a year |
| Current liabilities | Debts due within a year |
Edge cases worth knowing
Negative working capital is a real, valid result, not an error — it’s a meaningful warning sign that a business may have trouble meeting near-term obligations.
This is a dollar amount, not a ratio — two businesses with the same working capital figure can be in very different situations depending on their overall size, which is exactly why the current and quick ratios exist as complements.
Frequently asked questions
Can a profitable business still have negative working capital?
Yes — profitability and short-term liquidity are different questions; a business can be profitable on paper while still struggling to cover bills coming due soon.
What’s the difference between working capital and the current ratio?
Same two figures, different form — working capital is the dollar difference, while this site’s current ratio calculator expresses them as a ratio instead, which makes businesses of different sizes comparable.
