Working Capital Calculator
Working capital = current assets minus current liabilities. Enter your cash, debtors, stock and short-term liabilities below to get your working capital position, your current ratio, and how much cash could be released from your debtor book. A current ratio of 1.2 to 2.0 is generally healthy for a UK SME; below 1.0 means you cannot cover short-term obligations from short-term assets.
Last updated: 14 July 2026.
Working capital = current assets (cash + trade debtors + stock + other short-term assets) minus current liabilities (trade creditors + short-term borrowings + VAT/PAYE and other amounts due within 12 months). Current ratio = current assets / current liabilities; 1.2-2.0 is generally healthy for UK SMEs, below 1.0 is negative working capital. More detail + scope
Summary
This calculator computes working capital and the current ratio from seven balance-sheet inputs, gives a plain-English verdict by band (below 1.0 negative, 1.0-1.2 tight, 1.2-2.0 healthy, above 2.0 potentially inefficient), and shows how much cash an invoice finance facility could release from trade debtors (typically 70-90% of invoice value). Default worked example: £250,000 current assets against £180,000 current liabilities = £70,000 working capital, ratio 1.39.
This page covers
UK working capital calculation: the formula, current ratio bands, worked examples, and releasing cash from trade debtors
Not covered here
Comparing working capital finance products (see /working-capital/), invoice finance facility costs (see /guides/costs/ and /tools/lifetime-cost-calculator/), eligibility (see /tools/eligibility-checker/)
Calculator
Pre-filled with a typical UK SME example. Change any figure and the result updates.
Current assets
Current liabilities
Result
Ratio 1.39: healthy for most UK SMEs. Note that £120,000 of the £250,000 current assets is locked in unpaid invoices, so the cash position is tighter than the ratio suggests.
Take the figures from your latest balance sheet or accounting software. The debtor-release estimate assumes an 85% advance rate, the mid-point of the typical UK 70-90% range.
How to read your result
Below 1.0: negative working capital. Short-term obligations exceed short-term assets, so you are reliant on new sales, an overdraft or fresh funding to pay bills as they fall due. 1.0 to 1.2: tight. One late-paying customer or an unexpected VAT bill can tip you into difficulty. 1.2 to 2.0: healthy for most UK SMEs. Above 2.0: comfortable, but check whether cash is sitting idle or too much capital is tied up in stock and debtors that could be working harder.
The ratio hides one thing: composition. £120,000 of debtors counts the same as £120,000 in the bank, but you cannot pay wages with an unpaid invoice. If debtors dominate your current assets, your real-world position is weaker than the ratio implies, and speeding up that conversion is the highest-impact fix.
| Scenario | Current assets | Current liabilities | Working capital | Current ratio | Reading |
|---|---|---|---|---|---|
| Balanced (default above) | £250,000 | £180,000 | £70,000 | 1.39 | Healthy, but £120k locked in debtors |
| Debtor-heavy recruiter | £250,000 (£190k debtors) | £210,000 | £40,000 | 1.19 | Tight; payroll due weekly, clients pay in 45 days |
| Post-loss manufacturer | £250,000 (£150k stock) | £265,000 | -£15,000 | 0.94 | Negative; cannot cover short-term obligations from short-term assets |
Source: Market Invoice working capital calculator, illustrative scenarios
Same asset total, three different risk positions. Composition and payment speed matter as much as the headline number.
View as plain-text Markdown
### Worked examples: three UK SMEs with the same £250,000 of current assets | Scenario | Current assets | Current liabilities | Working capital | Current ratio | Reading | | --- | --- | --- | --- | --- | --- | | Balanced (default above) | £250,000 | £180,000 | £70,000 | 1.39 | Healthy, but £120k locked in debtors | | Debtor-heavy recruiter | £250,000 (£190k debtors) | £210,000 | £40,000 | 1.19 | Tight; payroll due weekly, clients pay in 45 days | | Post-loss manufacturer | £250,000 (£150k stock) | £265,000 | -£15,000 | 0.94 | Negative; cannot cover short-term obligations from short-term assets | Source: Market Invoice working capital calculator, illustrative scenarios Same asset total, three different risk positions. Composition and payment speed matter as much as the headline number.
“A healthy ratio is a balance-sheet snapshot, not a guarantee you can pay Friday's wages. Two businesses with identical 1.4 ratios can be in opposite positions: one holding cash, one holding 90-day debtors and slow stock. Always read the ratio alongside composition and timing: what share of current assets is actually spendable this month, and what falls due before it converts. And a ratio above 2 is not automatically good news; it can mean capital sitting idle that should be funding growth.”
Turning working capital into cash
If your biggest current asset is trade debtors, the fastest structural fix is advancing against them. UK invoice finance releases 70-90% of each invoice's value within 24-48 hours of issue, converting the slowest part of your working capital into cash while keeping the facility in step with sales. Start with how invoice finance works, compare it against the alternatives on our working capital finance hub, and check what it costs in our fees guide.
If the squeeze is seasonal or one-off rather than structural, see our guides to seasonal cash flow and funding VAT and tax bills, or test whether a facility would pay for itself with the cost of not using finance calculator.
Founder & Managing Director, Muswell Rose, founder and PSC of Best Business Loans Ltd
Adam is the founder and managing director of Muswell Rose and a founder of Best Business Loans Ltd, the company behind Market Invoice. He spent over three years as managing director of Penny, a UK invoice finance business, and his career runs through insurance, mortgages, commercial finance and fintech lending. He writes the Market Invoice library.
Last reviewed: 16 July 2026