Net working capital and supporting figures
Revenue-equivalent days divide net working capital by annual revenue and multiply by 365. This is a scale comparison, not days sales outstanding or a measured cash conversion cycle.
For an operating measure behind the inventory component, use the Inventory Turnover Calculator with period sales-cost and inventory balances.
The formula
Revenue-equivalent days divide net working capital by annual revenue and multiply by 365. This is a scale comparison, not days sales outstanding or a measured cash conversion cycle.
Worked working capital example
Current assets of 200,000 less current liabilities of 100,000 leave working capital of 100,000. With annual revenue of 1,000,000, that is 10% of revenue or 36.5 revenue-equivalent days.
How to use this calculator
- Enter current assets, current liabilities.
- Set annual revenue using the stated units or choices.
- Calculate and compare net working capital, working capital as a share of annual revenue, revenue-equivalent working-capital days.
Choosing inputs for working capital
Net working capital is the difference between two current balance-sheet totals. It can be positive, zero, or negative. The arithmetic does not treat negative working capital as automatically wrong because businesses collect and pay on different schedules, and some operating models receive cash before their obligations become due.
Annual revenue gives the balance a scale reference. A 100,000 difference represents a very different amount relative to a small business and a much larger business. Use revenue measured over a full year, rather than monthly revenue, when interpreting the reported share and revenue-equivalent day measure.
Interpreting net working capital
The day output expresses how many days of average annual revenue equal the working-capital amount. It does not estimate days of cash runway because current assets include more than cash and revenue is not expenditure. Cash forecasting needs receipts, payments, and timing rather than a single balance-sheet subtraction.
Assumptions & limitations
What this calculation assumes
- Asset and liability totals describe the same date and accounting classification.
- Revenue covers a full year and all amounts use one currency.
What to keep in mind
- Asset quality, seasonality, future cash flow, current ratios, and cash runway are not evaluated.
Common questions
Does negative working capital always mean insolvency?
No. It shows that entered current liabilities exceed current assets; timing and the business model require further review.
Are revenue-equivalent days cash runway?
No. They scale working capital by average revenue and do not measure daily cash spending.
Should I use monthly revenue?
No. The revenue share and revenue-equivalent days on this page use a full annual revenue amount.
Sources & further reading
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