How it works
Working capital = current assets − current liabilities. Current ratio = current assets / current liabilities.
Input definitions
- Current assets
- Enter the value in the labeled unit.
- Current liabilities
- Enter the value in the labeled unit.
A worked example
- Current assets
- 50000
- Current liabilities
- 20000
Assumptions & limits
Use current balance-sheet amounts in one currency. Current liabilities must exceed zero. A positive balance does not ensure cash is available on time.
Sources & review
Maintained by AnsRio. Methods and examples use automated checks; this does not imply independent professional certification.
Method updated 2026-10-17. Content checked against the stated method and examples. Our verification approach.
Common questions
Can working capital be negative?
Yes. Current liabilities exceeding current assets produce negative working capital. The current ratio is then below 1, but cash timing and the business model determine what that means in practice.
Are these investment and borrowing results guaranteed?
No. These are deterministic estimates from the inputs and stated method, not predicted returns or lending offers. Actual fees, tax, timing and contractual terms may differ.
Are tax, overhead and refunds included automatically?
Only the costs and rates explicitly entered or described in the formula are included. Use consistent currencies and periods, and check what your own accounting policy requires.
How does the Working capital and current ratio tool work?
Working capital = current assets − current liabilities. Current ratio = current assets / current liabilities.
What are the assumptions and limits of Working capital and current ratio?
Use current balance-sheet amounts in one currency. Current liabilities must exceed zero. A positive balance does not ensure cash is available on time.