Calculator

Can You Cover Short-Term Bills?

$80,000 in current assets against $50,000 of current liabilities gives $30,000 working capital and a 1.60 current ratio — generally a healthy cushion. Below 1.0 you cannot cover short-term bills from liquid assets.

Results

Visualization

Cashbizly provides illustrative business estimates only. Results depend on your inputs and assumptions and are not accounting, tax, or legal advice. Consult a CPA or financial advisor before major decisions. Tax-year figures (mileage, QBI, SEP, etc.) are labelled by year and should be verified at IRS.gov.

How It Works

Working Capital = Current Assets - Current Liabilities. Current Ratio = Current Assets / Current Liabilities. A ratio around 1.2-2.0 is typical for stable small businesses; too high can mean idle cash, too low signals insolvency risk. This is standard managerial-accounting liquidity analysis.

What Should You Do?

Scenario 1: a ratio of 0.9 means you would miss bills if all came due at once. Scenario 2: a retailer at 2.5 may be over-stocking. Scenario 3: tightening receivables (assets up, liabilities same) lifts both working capital and ratio.

Frequently Asked Questions

What is a good current ratio?

Roughly 1.2-2.0, but it is industry-specific — grocery runs thin, manufacturing holds more. Compare within your sector.

Why not maximize working capital?

Excess working capital can mean under-invested cash. The goal is enough, not maximum.

How is this different from runway?

Runway is a cash-timing forecast; working capital is a point-in-time liquidity snapshot from the balance sheet.

Authoritative References

Investopedia — Working Capital — Definition and current-ratio formula.
SBA — Manage Finances — Small-business liquidity basics.