SellersCalc

Finance math

Working Capital Calculator

The cushion between what you own and what you owe over the next twelve months.

Working capital = current assets − current liabilities. With $120,000 in current assets (cash, inventory, receivables) and $70,000 in current liabilities (supplier payables, credit-card balances, taxes due), working capital is $50,000 — and the current ratio is 120,000 ÷ 70,000 = 1.71, meaning $1.71 of short-term assets backs every $1 of short-term debt. A ratio between 1.5 and 2.0 is a healthy zone for most merchants; below 1.0, near-term bills exceed near-term resources. Enter both totals to get the dollar cushion and the ratio.

Working Capital Calculator — your numbers

Working capital

$50,000.00

Current ratio

1.71×

Estimate only. Results reflect exactly the numbers you enter — verify against your own accounting before making pricing decisions.

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Worked examples

Comfortable position

Current assets $120,000.00
Current liabilities $70,000.00
Working capital $50,000.00
Current ratio 1.71×

A $50,000 cushion and a 1.71 ratio — room to absorb a slow month or a big inventory buy.

Thin cushion

Current assets $45,000.00
Current liabilities $38,000.00
Working capital $7,000.00
Current ratio 1.18×

A 1.18 ratio clears the bills, but one delayed shipment or chargeback wave erases the slack.

Frequently asked questions

What counts as a current asset or current liability?

Current means convertible to cash — or due — within twelve months. Current assets: cash, marketplace payouts pending, accounts receivable, and inventory at cost. Current liabilities: supplier invoices, credit-card balances, sales tax collected but not remitted, loan payments due this year. Equipment and long-term debt stay out of both sides.

What is a good current ratio for an e-commerce business?

Between 1.5 and 2.0 is the comfortable range for most merchants. Below 1.0 means short-term obligations exceed short-term resources — a real liquidity risk. Well above 3.0 often signals capital sitting idle in excess inventory or an oversized cash pile that could be funding growth instead.

Can working capital be negative and the business still survive?

Temporarily, yes — especially for stores that collect from customers instantly and pay suppliers on terms, since cash arrives before bills do. But negative working capital removes all slack: one supplier demanding earlier payment, a platform payout hold, or a soft sales month can turn it into a genuine cash crisis.

Why do lenders and buyers look at inventory skeptically in this number?

Because inventory only becomes cash if it sells at full value, and distressed inventory rarely does. That is why analysts also compute the quick ratio — (current assets − inventory) ÷ current liabilities. If your working capital looks healthy but is mostly inventory, run the quick ratio too before trusting the cushion.

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Part of the Store Finance collection.