Working Capital Calculator — Methodology

Step-by-step calculation

Find your working capital and current ratio from balance-sheet figures, then check whether you clear the standard bank-lending threshold.

1. 1

   Add up current assets

   Total cash, accounts receivable, inventory, and prepaid expenses — anything convertible to cash within 12 months.

2. 2

   Add up current liabilities

   Accounts payable, short-term debt, accrued expenses, taxes due, and the current portion of long-term loans.

3. 3

   Read the working capital and current ratio

   The calculator subtracts to find working capital and divides to find the ratio.

4. 4

   Check the bank-readiness flag

   A current ratio of 1.5 or higher is the conventional floor for working-capital lending.

Assumptions and overrides

Standard accounting formula. The 1.5 bank-readiness threshold is conventional across US, UK, and SA commercial lending. Stress-testing the ratio with a 50% inventory write-down is recommended before any bank application.

Every region default on the calculator is editable. If your effective rate, fee, or threshold differs from the headline figure shown, type your own number into the field — the calculator recomputes instantly without leaving this page.

Review cadence and corrections

This methodology and the underlying rate defaults are reviewed at least annually, and immediately following any change to the headline rate from IRS, HMRC, or SARS. Every substantive update is recorded on the public changelog. Spotted an error? See the corrections policy for how to report it.

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