Working capital calculator
Net working capital is current assets minus current liabilities. The current ratio divides the two; the quick ratio removes inventory first. In acquisitions, a normalized working capital target (the peg) adjusts the price at closing.
Your inputs
Enter current assets, current liabilities to see the result.
Inputs
- Current assets
- Current liabilities
- Inventory
- Optional.
Outputs
- Net working capital
- Net working capital
- Current ratio
- Current ratio
- Quick ratio
- Quick ratio
How it is calculated
NWC = current assets − current liabilities
Current ratio = current assets ÷ current liabilities. Quick ratio = (current assets − inventory) ÷ current liabilities.
Worked example (illustrative)
Illustrative only: current assets $300, current liabilities $200 and inventory $100 give NWC $100, a current ratio of 1.5x and a quick ratio of 1.0x.
Assumptions and limitations
- A single balance-sheet date can hide seasonality; deal pegs use monthly averages.
- Deal definitions of working capital often exclude cash and debt.
- Ratios are undefined when current liabilities are zero.
Questions and answers
What is a working capital peg?
The normal level of working capital agreed in a deal; the price adjusts if closing working capital differs.
Is negative working capital bad?
Not always; some businesses collect before they pay. Context matters.
What is a good current ratio?
It varies by industry; compare to peers and the company's history.
Why exclude inventory in the quick ratio?
Inventory can take longer to turn into cash.
Sources
Content reviewed October 9, 2026 by the SourceX Partnerships Team. Results are calculated in your browser; nothing you type is stored.