Working Capital Analyzer
Analyzes the relationship between current assets and current liabilities to measure short-term financial health. Calculates the working capital ratio, quick ratio, and cash conversion cycle to reveal liquidity strengths and weaknesses.
Accounting - Working Capital Analyzer.xlsx
Excel (.xlsx) — No macros — Works in Excel, Google Sheets, LibreOffice
What This Spreadsheet Solves
- Measuring whether the business can cover short-term obligations
- Identifying if too much capital is tied up in inventory or receivables
- Tracking the cash conversion cycle to optimize working capital efficiency
- Providing liquidity metrics for lender covenants or investor reporting
- Spotting deteriorating liquidity trends before they become critical
Who This Is For
- CFOs monitoring short-term financial stability
- Controllers preparing liquidity reports for management
- Lenders evaluating borrower financial health
- Business owners optimizing cash tied up in operations
Inputs
- $Cash and equivalents
- $Accounts receivable
- $Inventory
- $Accounts payable
- $Other current liabilities
- $Annual revenue
Outputs
- Net working capital (dollar amount)
- Current ratio
- Quick ratio
- Days sales outstanding (DSO)
- Days inventory outstanding (DIO)
- Cash conversion cycle (days)
How Calculations Work
Net working capital is current assets minus current liabilities. The current ratio divides total current assets by total current liabilities. The quick ratio excludes inventory from the numerator for a stricter liquidity test. DSO measures how quickly receivables convert to cash. DIO measures how long inventory sits before sale. The cash conversion cycle combines DSO and DIO minus days payable outstanding to show the total number of days capital is locked in the operating cycle.
Example Use Case
Scenario: A company has $50,000 in cash, $80,000 in receivables, $60,000 in inventory, $70,000 in payables, $20,000 in other current liabilities, and $1,200,000 in annual revenue.
Result: Net working capital is $100,000. Current ratio is 2.11. Quick ratio is 1.44. DSO is 24 days. DIO is 18 days. Cash conversion cycle is 21 days, meaning cash is tied up in operations for three weeks on average.
What You Get — 5 Sheets
Technical Details
Frequently Asked Questions
What is a good current ratio?
Generally, 1.5 to 2.0 is considered healthy. Below 1.0 means current liabilities exceed current assets, which signals potential liquidity problems. Above 3.0 may mean capital is underutilized.
Why is the quick ratio more conservative?
It excludes inventory because inventory may not convert to cash quickly, especially in a downturn. The quick ratio shows whether you can meet obligations without selling inventory.
What does a negative cash conversion cycle mean?
It means the business collects from customers before it pays suppliers. This is favorable and common in businesses with strong supplier payment terms.
How often should I run this analysis?
Monthly is ideal. Quarterly is the minimum for meaningful trend tracking. The template supports entering multiple periods to see how metrics evolve.
Can I benchmark against industry averages?
Enter industry benchmark values on the CONFIG sheet. The OUTPUT sheet will show your metrics alongside the benchmarks for comparison.
Download Working Capital Analyzer
Ready to use immediately. Enter your data in the INPUT sheet, see results in OUTPUT.