Updated · Built and checked by the PlinzoTools team, formulas tested against published sources
Calculate working capital and the current ratio from current assets and liabilities.
Working capital measures a business's short-term financial health -- whether it has enough liquid assets to cover its short-term obligations.
Enter current assets and current liabilities. Working capital and current ratio appear instantly.
Working Capital = Current Assets - Current Liabilities
Current Ratio = Current Assets / Current Liabilities
Suppose a small business has 80,000 in current assets (cash, receivables and inventory expected to turn into cash within a year) and 50,000 in current liabilities (payables, short-term loan payments, accrued wages and similar obligations due within a year). Working capital is 80,000 minus 50,000, which is 30,000. The current ratio is 80,000 divided by 50,000, which is 1.60. In plain terms, the business holds 1.60 of short-term assets for every 1.00 of short-term obligations.
Now change the picture: the same business has 45,000 in current assets but 60,000 in current liabilities. Working capital is negative 15,000 and the current ratio is 0.75. The tool shows both figures side by side, so you can see immediately that the shortfall is not only a dollar gap but also a ratio below 1.00, meaning short-term obligations exceed short-term resources.
The tool does not classify anything for you. It simply subtracts and divides the two amounts you type in, so the quality of the result depends on what you include. Pull both figures from the same balance sheet date. A few practical guidelines:
A ratio above 1.00 means current assets exceed current liabilities on paper; exactly 1.00 means they are equal; below 1.00 means the opposite. What counts as healthy depends heavily on the industry, the mix of assets, and how quickly receivables and inventory actually turn into cash. A business with mostly cash and fast-paying customers can run comfortably at a lower ratio than one whose current assets are mainly slow-selling inventory. Treat the ratio as a starting point for questions, not a verdict.
If you enter zero for current liabilities, the ratio cannot be calculated as a normal number, and the tool displays an infinity symbol for the ratio while working capital simply equals your current assets. That result reflects the arithmetic, not a special achievement, so check that you did not leave the liabilities field empty by mistake.
If you are using these figures for a loan application, covenant compliance, a sale of the business, or tax reporting, have an accountant confirm how each balance should be classified. Lenders often define working capital in their own way, and the definition in your agreement is the one that matters.
Current liabilities exceed current assets -- a potential red flag for short-term liquidity, though some business models (e.g. high-turnover retail) can operate this way sustainably.
That appears when current liabilities are zero, because dividing by zero has no ordinary result. Working capital is still shown as your current assets minus zero. Double-check that you entered your liabilities if you expected a normal ratio.
It can be a sign of idle resources, such as excess cash sitting unused or inventory that is not selling. Whether a high figure is a problem depends on the reason behind it, which the ratio alone cannot tell you.
Generally yes. The part of a long-term loan that is due within the next twelve months is normally treated as a current liability, so include it on the liabilities side for a realistic picture.
The inputs stay in the page while you use it and reset to the sample values with the Clear action. Use the copy or download action to keep a text summary of your result.
Reference: Consumer Financial Protection Bureau