Cash flow & working capital

Working capital and current ratio calculator

Working capital is the cash tied up in running the business day to day. Too little and you cannot pay suppliers; too much and capital sits idle in stock and unpaid invoices.

Inputs

Result

Net working capital

USD 200,000

Working capital excluding cash
USD 110,000
Current ratio
1.71x
Quick ratio
1.14x
Working capital % of revenue
4.58%
Cash needed per 1m of new revenue
USD 45,800
  • Buyers set the completion target on working capital excluding cash and debt.

How to use this calculator

  1. 1Enter current assets, split out inventory and cash.
  2. 2Enter current liabilities, including the current portion of any loans.
  3. 3Enter annual revenue to see working capital intensity.

Why it decides deals, not just cash flow

Most business sales complete on a cash-free, debt-free basis with a normalised working capital target. If you hand over less working capital than the agreed level, the price is adjusted down dollar for dollar.

The target is usually a 12-month average of net working capital, so improving collections in the final quarter before sale rarely helps — but a sustained twelve-month improvement does.

Reading the ratios

A current ratio around 1.5-2.0 is comfortable in most industries. The quick ratio strips out inventory and shows whether you could meet short-term obligations without selling stock.

Working capital as a percentage of revenue tells you how much extra cash growth will consume: a business at 15% needs 150,000 of additional funding for every 1m of new revenue.

Call this tool from the API

Every calculator on this site is also an endpoint. Get a free key from the developer page and call it from your product, spreadsheet or AI agent.

curl -X POST https://utopiavalue.co/api/v1/tools/working-capital-calculator \
  -H "Authorization: Bearer $UTOPIA_API_KEY" \
  -H "Content-Type: application/json" \
  -d '{"currentAssets":480000,"inventory":160000,"cash":90000,"currentLiabilities":280000,"revenue":2400000,"currency":"USD"}'

Frequently asked questions

Is negative working capital always bad?

No. Businesses that collect from customers before paying suppliers — hospitality, subscriptions, some retail — run negative working capital profitably. It only signals trouble when it comes with declining trade.

Should I include the bank overdraft?

Yes, in current liabilities. Exclude long-term debt beyond its current portion.

How much working capital will a buyer require?

Typically the twelve-month average of net working capital excluding cash and debt. Model it early; it is one of the largest late-stage price adjustments in SME deals.