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Working Capital Calculator
A working capital calculator, current ratio calculator, and cash conversion cycle calculator in one: enter balance sheet figures and annual revenue to see where cash is tied up and how long the operating cycle really runs.
Your balance sheet
Pull these from your most recent balance sheet and P&L. Annual revenue and COGS turn the balances into DSO, DPO, and cash conversion cycle estimates.
Working capital
$120,000
current assets minus current liabilities
What this says
Current assets exceed current liabilities by $120,000. That cushion is what funds payroll, inventory buys, and slow-paying customers between cash inflows.
A current ratio of 2.20 means $220 of current assets per $100 of current liabilities. Healthy ranges vary widely by industry: a distributor, an agency, and a restaurant can all be fine at very different ratios, so compare against peers in your industry rather than a universal target.
The estimated cash conversion cycle is 21 days: roughly how long a dollar stays tied up in inventory and receivables before vendor terms give it back. A shorter cycle releases cash permanently.
DSO, DPO, and DIO here are year-average estimates from annual figures; month-end balances swing with seasonality. Healthy ranges vary by industry, so read these against your own trend and your industry's norms. Read the working capital guide.
Estimates for educational purposes only, not tax, legal, investment, or accounting advice. Your specific facts will change the result; confirm with a CPA before acting.Want the cash out, not just the number?
Working capital is usually the cheapest financing a small business has: cash already earned but parked in receivables, inventory, or vendor terms. Our fractional CFO work turns these metrics into a monthly cadence of collections, payment, and inventory discipline.
Frequently Asked
Working capital questions
- How do I calculate working capital?
- Working capital is total current assets minus total current liabilities, both straight off the balance sheet. Current assets typically include cash, accounts receivable, inventory, and prepaids; current liabilities include accounts payable, credit cards, accrued expenses, and any debt due within 12 months. A positive number is the cushion funding day-to-day operations; a negative number means near-term obligations exceed near-term assets.
- What is a good current ratio?
- There is no universal target, because healthy ranges vary by industry. Businesses that collect before they deliver, like firms billing retainers, operate comfortably at ratios that would signal stress at a distributor carrying inventory on net-60 terms. The more useful reading is your own trend over time and a comparison against peers in your industry, not a single cutoff number.
- What is the cash conversion cycle?
- The cash conversion cycle is days inventory outstanding plus days sales outstanding minus days payables outstanding: the number of days a dollar stays tied up in inventory and receivables before vendor terms give it back. A shorter cycle releases cash permanently. Some models run a negative cycle, collecting from customers before paying suppliers, which means vendors are effectively financing operations.
- How accurate are the DSO and DPO estimates?
- They are year-average approximations: receivables divided by annual revenue times 365, and payables divided by annual COGS times 365. Month-end balances swing with seasonality and billing timing, so a single snapshot can overstate or understate the true collection and payment pace. For decisions, compute the ratios monthly from closed books and watch the trend rather than any single reading.
Keep reading
Cash Conversion Cycle (CCC)
How many days between paying for inputs and receiving cash from customers: Days Inventory + Days Sales Outstanding − Days Payables Outstanding.
GlossaryDSO and DPO (Days Sales / Payables Outstanding)
DSO = average days customers take to pay you. DPO = average days you take to pay vendors. Together they reveal working-capital health.
GlossaryWorking Capital
Current assets minus current liabilities, the cash and near-cash needed to fund day-to-day operations.
GlossaryDCF (Discounted Cash Flow)
A valuation method that estimates what a business is worth today by projecting its future cash flows and discounting them back at a rate reflecting their risk.
GuideWorking Capital Management: Unlocking Cash Trapped in AR, AP, and Inventory
For small businesses, working capital is where the cash lives. A practical guide to shrinking DSO, extending DPO responsibly, and taming inventory without breaking operations.
GuideDSO vs DPO: The Two Numbers That Drive Your Working Capital
Days sales outstanding measures how fast customers pay you. Days payable outstanding measures how fast you pay vendors. How to calculate both, what healthy looks like by industry, and how to move each without damaging relationships.