Working Capital Calculator

Inventory

Receivables

Payables

Cash

Annual revenue

Annual cost of goods

Result

Working capital$5,500,000.00
Cash cycle, days53.2
Stock sits, days60.8
Customers pay in, days30.4
You pay suppliers in, days38
Current ratio3.2

Where a profitable company runs out of money

Calculates working capital and the cash conversion cycle from inventory, receivables and payables.

Profit and cash are different things. A company can sell everything at a good margin and still be unable to pay wages, because the money is sitting in stock and in invoices that customers have not paid yet.

The cash conversion cycle measures exactly that gap: how many days pass between paying for goods and being paid for them. Shortening it releases cash without selling a single extra unit.

What this calculator shows

Working capital and the current ratio
The cash cycle in days
How long stock sits, how long customers take and how long you take to pay

What to keep in mind

Days are calculated against annual revenue and cost of goods, so seasonal businesses should use a matching period instead.
Only the operating items are counted. Loans, tax balances and other short-term liabilities also affect liquidity.

FAQs

What is the cash conversion cycle?

Days of stock plus days customers take to pay, minus days you take to pay suppliers. It is how long your money is out of the business.

Can the cycle be negative?

Yes, and it is enviable. Retailers who sell for cash and pay suppliers in sixty days are financed by their own suppliers.

Is more working capital better?

Not necessarily. It means the business can pay its bills, but it also means money is sitting in stock and receivables rather than working.

How do I shorten the cycle?

Three levers: hold less stock, invoice and chase faster, and negotiate longer terms with suppliers. The third is usually the least painful.

Worked example

A trading company

Input: 4M inventory, 3M receivables, 2.5M payables, 1M cash, 36M revenue, 24M cost of goods

Output: 5.5M of working capital and a 53-day cycle

Note: Stock sits 61 days, customers pay in 30, suppliers are paid in 38. Fifty-three days of turnover is financed out of the company's own pocket.

Useful links

All tools in Business and warehouse calculators

Working Capital Calculator

Result

Related tools

Inventory Turnover Calculator

Safety Stock Calculator

Break-Even Calculator

Useful links