Determine Your Working Capital Requirements | Financial Calculators for PeoplesBank

Business Information

Annual growth rate

%

The annual growth rate of your business.

Current ratio target

The target current ratio you are trying to reach. Current ratio compares a firm's current assets to its current liabilities. The current ratio for most businesses should be between 1.5 and 3.0.

$

The value of your current assets. Currents asset are either cash or those assets which can converted to cash within a reasonable period. Typical current assets include cash, cash equivalents, short-term investments, accounts receivable, etc.

Current liabilities

$

The value of your current liabilities. Current liabilities typically include short term debt, accounts payable, and other types of debt that need to be paid within one year.

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Working Capital Requirements
Current Ratio	Current Working Capital	Required Working Capital

Working capital is the amount you have remaining when current liabilities are subtracted from current assets. Whether a business has enough working capital is measured by the 'current ratio', or current assets divided by current liabilities. Generally, a current ratio of between 1.2 and 2 is considered the sign of a healthy business. If your current ratio is below 1.2, its an indicator that your business might have difficulties paying its bills. If it is above 2, its an indicator that your assets are not being put to their best use.