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Working Capital Calculator

Balance Sheet Health

Measure your short-term liquidity, Current Ratio, and Quick Ratio to ensure your business can easily pay upcoming bills and suppliers.

1. Current Assets (Realizable within 12 Months)
2. Current Liabilities (Due within 12 Months)
Net Working Capital (NWC)

₹

Current Assets minus Current Liabilities
Current Ratio x
Quick Ratio (Acid Test)

x

Excludes illiquid inventory
Total Liquid Assets

₹

vs ₹ dues

Create GST Invoice

Standard Banking Liquidity Benchmarks

When applying for CC limits or bank overdrafts in India, bankers inspect two key ratios:

  • • Current Ratio 1.33x to 2.0x: Standard benchmark required by Indian public and private sector banks under Nayak Committee norms.
  • • Quick Ratio > 1.0x: Confirms you can immediately cover liabilities even if inventory cannot be sold immediately.

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How to Use This Tool

Simple steps to calculate and verify

  1. 1
    Enter Current Assets Input cash in bank, unpaid customer invoices (accounts receivable), and raw material/inventory value.
  2. 2
    Enter Current Liabilities Input vendor bills due (accounts payable), short-term bank loans, employee dues, and accrued GST.
  3. 3
    Calculate Net Working Capital View available operating liquidity (`Current Assets - Current Liabilities`).
  4. 4
    Analyze Liquidity Ratios Check Current Ratio and Quick (Acid-Test) Ratio against recommended financial benchmarks.

Pro Tips & Statutory Advice

Practical business & compliance advice

  • Ideal Current Ratio Range A Current Ratio between 1.5 and 2.0 indicates optimal liquidity without keeping excessive capital unproductive.
  • Acid-Test (Quick) Ratio Quick Ratio excludes inventory (`(Cash + Receivables) / Liabilities`). A ratio of 1.0 or higher means you can pay all debts immediately.
  • Danger of Negative Working Capital If short-term liabilities exceed current assets, your business faces cash shortages if receivables are delayed even slightly.
  • Shorten Cash Conversion Cycle Negotiate longer supplier payment terms and enforce strict customer credit limits to free up locked capital.

Frequently Asked Questions

Understanding working capital requirements and liquidity ratios.

What is Net Working Capital?

Net Working Capital (NWC) equals Current Assets minus Current Liabilities. It measures the operating liquidity available to a business to fund daily payroll, raw materials, and utility bills.

What is the difference between Current Ratio and Quick Ratio?

The Current Ratio includes all current assets (Cash, Debtors, Inventory, and Prepaids). The Quick Ratio (Acid-Test Ratio) excludes inventory and prepaid expenses because stock takes time to liquidate into cash, providing a stricter measure of immediate liquidity.