Calculator
Working Capital Calculator
Cash, receivables, inventory, short-term deposits.
Payables, short-term loans, dues within a year.
Current assets vs liabilities
- Current assets₹15,00,00065%
- Current liabilities₹8,00,00035%
Current assets/liabilities are those expected to convert to cash or fall due within 12 months, or within the normal operating cycle of the business if that is longer. A very high ratio can mean idle cash or slow-moving inventory, not just safety.
Working capital is what is left of your short-term assets (cash, receivables, stock) after covering your short-term dues — current assets minus current liabilities. It is the clearest gauge of whether a business can pay its short-term dues without scrambling. This calculator returns your working capital and your current ratio, and explains what the number means: positive working capital and a current ratio between 1.5 and 2 generally signals a business that can comfortably cover its near-term obligations.
What your result means
- A current ratio of 1.5–2 is the healthy band; below 1 signals short-term stress, and above 3 often means idle cash or dead stock, not extra safety.
- Positive working capital means you can cover near-term dues without scrambling — but the quality of those current assets matters too (cash beats slow-moving inventory).
- Watch the trend: working capital tightening as payables grow faster than receivables is an early warning of a cash crunch.
How to use this calculator
- Total your current assets: cash, bank, receivables, inventory, and deposits maturing within a year.
- Total your current liabilities: supplier payables, short-term loans, and dues payable within a year.
- Read the working capital figure — positive means short-term solvency.
- Check the current ratio against the 1.5–2 healthy band.
- If the ratio is below 1, plan to collect receivables faster or refinance short-term dues.
The formula
Working capital = Current assets − Current liabilities. Current ratio = Current assets ÷ Current liabilities. A ratio below 1 means short-term dues exceed short-term assets.
Worked example
With ₹15,00,000 in current assets (cash, receivables, stock) and ₹8,00,000 in current liabilities (payables, short-term loan), working capital = ₹7,00,000 and the current ratio = 15 ÷ 8 = 1.875. That is healthy — comfortably above 1 and within the 1.5–2 sweet spot, so, provided receivables and stock turn into cash on time, the business should be able to meet its near-term obligations without fresh borrowing.
When to use it
- A quick solvency check before taking on new short-term commitments.
- Monitoring whether the business can pay suppliers and salaries on time.
- Spotting a cash crunch building up as payables grow faster than receivables.
- Preparing figures a lender will ask for before sanctioning a CC limit.
Frequently Asked Questions
References & sources
- ICAI Board of Studies — Ratio analysis (current ratio, current assets and current liabilities)
- ICAI — Guidance Note on Ind AS Schedule III (current and non-current classification)
- RBI — FAQs on MSMEs: how banks assess working capital requirements (Q.7)
How this calculator was checked: The working capital and current ratio formulas (Current assets − Current liabilities; Current assets ÷ Current liabilities) were checked against ICAI study material and its Schedule III guidance on current items, and re-run against the worked example on 2026-09-15 — the ₹7,00,000 and 1.875 figures match the code’s output exactly. The 1.5–2 band is a rule of thumb (ICAI study material treats 2:1 as acceptable, varying with the business), and a bank sets any actual limit on its own appraisal; not reviewed by a registered accountant.