Net Working Capital Calculator: Assess Your Company’s Liquidity
Net working capital equals current assets minus current liabilities; U.S. public firms showed a median $162 million positive balance in 2022 (Statista, https://www.statista.com/statistics/1254456/working-capital-us-public-companies/). Use this calculator to enter both figures, press “Calculate,” and instantly see whether cash covers near-term debts. Positive results signal short-term solvency; negative results warn of liquidity gaps.
Net Working Capital Calculator
Net Working Capital:
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How to use the tool
Gather figures from your most recent balance sheet—cash, receivables, inventory, payables, and short-term loans.
Add current assets and type the total in the first field.
• Example 1: $275,800
• Example 2: $418,450
Add current liabilities and enter the sum in the second field.
• Example 1: $143,200
• Example 2: $307,900
Click “Calculate.” The script computes net working capital.
$$\text{Net Working Capital}= \text{Current Assets} – \text{Current Liabilities}$$
Example calculation
Current assets: $275,800
Current liabilities: $143,200
$$275{,}800 – 143{,}200 = 132{,}600$$
A positive $132,600 shows you can cover short-term debts and still have surplus cash.
Quick-Facts
Typical healthy current ratio ranges from 1.2 – 2.0 (Corporate Finance Institute, https://corporatefinanceinstitute.com/resources/accounting/current-ratio/).
U.S. SMEs keep 23 % of assets in cash or equivalents (Federal Reserve “Small Business Credit Survey,” 2023).
Negative net working capital lasting two quarters often triggers bank covenant reviews (JP Morgan Commercial Banking Guide, 2022).
Inventory usually represents 30-40 % of current assets in manufacturing firms (McKinsey Working Capital Report, 2021).
FAQ
What is net working capital?
Net working capital is the excess of current assets over current liabilities, indicating near-term liquidity (Investopedia, https://www.investopedia.com/terms/n/networkingcapital.asp).
Why does a positive balance matter?
Positive net working capital shows you can pay suppliers and lenders on time, avoiding penalties and supply disruptions (CFI, https://corporatefinanceinstitute.com/resources/accounting/net-working-capital/).
Can net working capital be too high?
Yes; excessive cash or inventory ties up funds that could earn higher returns elsewhere, lowering overall ROA (Harvard Business Review, https://hbr.org/2020/09/optimize-working-capital).
How often should you recalculate?
Recompute at least quarterly to match financial reporting; fast-growing firms update monthly for tighter cash control (Deloitte Cash Management Survey, 2022).
What causes negative net working capital?
Common drivers include rapid sales growth funded by payables, over-leveraged short-term debt, or slow receivable collections (PwC Working Capital Study, 2023).
How do you improve the figure quickly?
Accelerate receivable collection, negotiate longer supplier terms, and trim non-essential inventory—actions that free cash within weeks (McKinsey, 2021).
Is NWC the same as the current ratio?
No; NWC is a dollar amount, while the current ratio divides assets by liabilities to give a relative measure (SEC Investor.gov glossary).
What threshold alerts lenders?
Banks usually flag NWC turning negative for two consecutive periods as a covenant breach risk (JP Morgan Commercial Banking Guide, 2022).
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