Enter the current assets and current liabilities into the calculator to determine the working capital ratio of a business.
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Working Capital Ratio Formula
The following formula is used to calculate a working capital ratio.
WCR = A / L
- Where WCR is the working capital ratio
- A is the total assets ($)
- L is the total liabilities ($)
Working Capital Ratio Definition
A working capital ratio is a ratio of the value of all assets to all liabilities of a business. It’s one measure used to determine the profitability and position of a company.
Working Capital Ratio Example
How to calculate a working capital ratio?
- First, determine the total asset value.
Measure the value of all assets owned by the business.
- Next, determine the total liabilities value.
Measure the total value of all liabilities owned by the business.
- Finally, calculate the working capital ratio.
Calculate the working capital ratio using the equation above.
FAQ
A working capital ratio is a measure of how much capital a company has to use with respect to liabilities. The greater the ratio, the greater the position of the company.
