Working Capital Calculator

Working capital = Current Assets − Current Liabilities. It measures a company's short-term liquidity and operational efficiency — whether you have enough liquid assets to cover your obligations due within 12 months. Positive working capital means you can operate without short-term financial distress.

A current ratio of 1.5–2.5 is generally healthy. Below 1.0 means current liabilities exceed current assets, suggesting short-term liquidity risk. Above 3.0 may indicate inefficient use of assets. However, ratios vary significantly by industry — retail and FMCG often run lower ratios than manufacturing.

The quick ratio (also called the acid-test ratio) excludes inventory from current assets, as inventory may not be easily liquidated quickly. Quick Ratio = (Cash + Receivables) ÷ Current Liabilities. A ratio above 1.0 is ideal. Below 1.0 signals potential short-term cash crunches if inventory cannot be sold quickly.

Speed up receivables collection (offer early payment discounts, use automated reminders), negotiate longer payment terms with suppliers, reduce excess inventory (especially important given storage costs and spoilage in Nigeria), use invoice financing/factoring for large receivables, and maintain a short-term credit facility.

Nigeria's business environment adds unique working capital pressures: inflation erodes purchasing power of cash held, naira devaluation affects imported inventory costs, delayed government payments create receivables bottlenecks, and power cuts increase operating costs. Tight working capital management is essential for survival.