Canonical formula calculator
WORKING CAPITAL
The cash buffer between your short-term assets and short-term obligations — your operating safety net.
Worked example
How the number is worked out
A small builder looking at what is liquid against what is owed inside the year.
Starting from
Working
Thirty-three thousand of headroom inside the next twelve months. It is a snapshot, not a rate — a business can hold this figure and still miss a bill on the fifteenth if the timing does not line up.
What this tells you
Working capital is the dollar amount of cushion you have between near-term assets and near-term obligations. Positive working capital means you could cover your short-term bills today even if no new cash came in. Negative working capital means you are technically insolvent on a short-term basis and rely on incoming cash to stay current. Both can be real operating states; only one is comfortable.
When to use it
Calculate working capital at month-end. Pair it with current ratio for the full picture: the ratio tells you whether your buffer is proportionally healthy, the dollar number tells you how big the buffer actually is. A 1.5 ratio with $50K working capital is a different reality than a 1.5 ratio with $500K — the percentages are the same, the cash cushion is not.
What it doesn’t tell you
Working capital is a snapshot, not a flow. It does not tell you about the timing of receivables versus payables, the quality of your inventory, or your ability to raise short-term financing. A business with negative working capital can still operate fine if customer payments arrive before supplier payments are due — but you have to actually know the timing.
Reckon it, don’t just calc it
A calculator gives you today’s number. Reckon takes your plan to make your own money and checks it against what’s real — your margin, your price, what it takes to hit the take-home you want. No AI, no guessing — the same input always gives the same answer.