Calculate working capital, current ratio, and quick ratio with cash conversion cycle analysis and trend visualization.
This calculator takes current assets and current liabilities from a balance sheet and computes working capital (assets minus liabilities), the current ratio (assets divided by liabilities), and the quick ratio, which strips inventory and prepaid expenses out of current assets before dividing. Add cost of goods sold, revenue, receivables, inventory, and payables and it also derives the cash conversion cycle, the number of days between paying suppliers and collecting cash from customers. Most users are surprised that a rising current ratio is not automatically good news; it can mean cash or unsold inventory is piling up rather than liquidity actually improving.
A concrete input and expected output from the current implementation.
Input
Current assets: $500,000 (cash $80,000, accounts receivable $250,000, inventory $150,000, prepaid expenses $20,000). Current liabilities: $250,000.
Expected output
Working capital = $250,000. Current ratio = 2.00. Quick ratio = 1.32.
Working capital is current assets minus current liabilities ($500,000 - $250,000). Current ratio divides current assets by current liabilities (500,000 / 250,000 = 2.00). Quick ratio removes inventory and prepaid expenses first (500,000 - 150,000 - 20,000 = 330,000), then divides by current liabilities (330,000 / 250,000 = 1.32).
Working capital is a dollar amount (current assets minus current liabilities). Current ratio divides the same two totals to give a multiple. Quick ratio recalculates the numerator by removing inventory and prepaid expenses, since those cannot reliably be converted to cash in the short term, then divides by current liabilities.
With cost of goods sold, revenue, and average inventory, receivables, and payables entered, the tool computes days inventory outstanding plus days sales outstanding minus days payable outstanding. The result is the number of days cash is tied up between paying for inventory and collecting payment from customers; a negative value means suppliers effectively finance operations.
Quick ratio has no single universal formula. Some versions subtract only inventory from current assets; this tool also subtracts prepaid expenses, since they cannot be turned into cash. Check which current asset line items your accountant's version excludes and match the inputs before comparing the two results.
Yes for working capital and current ratio, and the quick ratio will simply equal or come close to the current ratio since there is little or no inventory to remove. The cash conversion cycle is still valid but less informative, since days inventory outstanding will be near zero and the cycle mostly reflects receivables minus payables.
The example and behavioral notes were checked against the browser implementation. Standards and primary references below define the relevant format, formula, or platform behavior.
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