Phase 1 · Live · Working Capital
Working Capital Ratio Calculator
Working capital problems are often invisible until they become critical. This tool takes your receivables, inventory, payables, and trade cycle data and calculates how much capital is tied up — and how much you could free up by improving DSO or extending DPO.
How to read your result
- Above 1.5 — Strong: Comfortable buffer over current obligations. Capital may be over-deployed in receivables or inventory — check your DSO.
- 1.2–1.5 — Adequate: Functional but watch the trade cycle. A single large overdue invoice could push this below 1.2.
- 1.0–1.2 — Stretched: Limited room for collection delays or supplier demands. Prioritise DSO improvement.
- Below 1.0 — At risk: Current liabilities exceed current assets. Requires immediate review of payable terms and receivables collection.
What this tool does not do
- Model seasonal variation in receivables or inventory
- Account for off-balance-sheet facilities like invoice discounting
- Distinguish between strategic and distressed inventory
- Reflect currency risk on cross-border receivables
This tool is a decision-support aid and does not constitute financial advice.