Working capital is calculated by subtracting current liabilities from current assets. The working capital ratio is a different calculation: current assets divided by current liabilities. British Business Bank uses these measures to explain a business’s capacity to meet its short-term financial commitments. Source: British Business Bank: Working capital

Look beyond the headline number

Review the dates when amounts owed to the business should arrive and supplier bills must be paid. Discuss overdue receivables and restricted funds with the finance lead. This makes the working capital figure more useful when deciding how to meet upcoming commitments.

Keep assumptions beside the report

For a hypothetical calculation, £60,000 of current assets less £45,000 of current liabilities gives £15,000 of working capital. Record the reporting date and the items included. Pair the calculation with a cash flow forecast to examine payment timing as well as the total.

Written and updated by Travelgenix. Sources checked on 19 October 2026. Practical advice and examples are Travelgenix editorial guidance.