Birchbank Business Capital, a small-business funding service in Danville, Illinois, sets out a working capital worksheet for Vermilion County owners: the formula, a spreadsheet layout, how to work it online with your own figures, how to estimate working capital needs from the cash cycle, and what the current ratio shows. It is arithmetic only, not an offer.
Working Capital Calculator in Danville, IL
Working capital = current assets - current liabilities. Current assets are cash, receivables and inventory that turn into cash within a year. Current liabilities are bills due within a year: supplier payables, accrued wages and taxes, and the next twelve months of loan payments.
Illustration only, invented figures: a Danville, IL store has $24,000 in cash, $41,000 in receivables and $58,000 in inventory, so $123,000 in current assets. The invented store owes $37,000 to suppliers, $12,000 in accrued wages and taxes and $18,000 in loan payments due this year, so $67,000 in current liabilities. In this invented example, working capital is $123,000 - $67,000 = $56,000.
| Line | Example figure |
|---|---|
| Cash | $24,000 |
| Accounts receivable | $41,000 |
| Inventory | $58,000 |
| Current assets | $123,000 |
| Accounts payable | $37,000 |
| Accrued wages and taxes | $12,000 |
| Loan payments due within a year | $18,000 |
| Current liabilities | $67,000 |
| Working capital | $56,000 |
Working Capital Calculator Excel in Danville, IL
The same worksheet fits in a spreadsheet. Put the labels in column A and the figures in column B, one line per item, then add three formulas:
- Current assets, in B5: =SUM(B2:B4) for cash, receivables and inventory
- Current liabilities, in B9: =SUM(B6:B8) for payables, accruals and loan payments due
- Working capital, in B10: =B5-B9, and the current ratio in B11: =B5/B9
Copy the columns across for each month to see working capital move through the year. The trend tells a partner more than a single month.
Working Capital Calculator Online in Danville, IL
This page has no online calculator box; the arithmetic is short enough to do on paper or in a spreadsheet, and doing it by hand shows where each number comes from. Pull the figures from the latest balance sheet, or from the bookkeeping software's balance sheet report as of the last month-end, so that assets and liabilities are counted on the same date. Nothing you work out here is sent anywhere.
How to Calculate Working Capital Needs in Danville, IL?
Working capital needs are the cash the business's cycle ties up: the days money sits in receivables and inventory, less the days suppliers wait to be paid. Three ratios measure it:
- Days sales outstanding = receivables / annual sales x 365
- Days inventory outstanding = inventory / annual cost of goods sold x 365
- Days payables outstanding = payables / annual cost of goods sold x 365
Illustration only, invented figures: with $620,000 in annual sales and $410,000 in cost of goods sold, the store above has receivables of 24 days, inventory of 52 days and payables of 33 days. In this invented example its cash cycle is 24 + 52 - 33 = 43 days, and at about $1,123 of cost of goods per day, the cycle ties up roughly $48,301 (our arithmetic on the invented figures). That is the order of magnitude a working capital loan or a line of credit would be sized against.
What Is a Good Working Capital Ratio in Danville, IL?
The current ratio is current assets divided by current liabilities. In the example above it is $123,000 / $67,000 = 1.84. A ratio above 1 means current assets cover the bills due within a year; below 1 means they do not. The quick ratio leaves inventory out: ($24,000 + $41,000) / $67,000 = 0.97 in this invented example.
No single ratio is good for every business. A store that turns its stock in days and an agency with no inventory read differently. Compare the ratio with the business's own past months, and ask a partner which measures it reads for your trade.
A Danville, IL Auto Shop on the Same Worksheet
Illustration only, invented figures: a repair shop with $15,000 in cash, $22,000 in receivables from fleet and insurance customers and $9,000 in parts has $46,000 in current assets. The invented shop owes $14,000 to parts suppliers, $8,000 in accrued wages and $11,000 in loan payments due this year, $33,000 in all. In this invented example working capital is $13,000 and the current ratio is 1.39. With little stock on the shelves, receivables are the shop's biggest current asset, so the days customers take to pay drive its cash needs more than inventory does.
What the Worksheet Leaves Out for a Danville, IL Request
The worksheet does not show profit, debt beyond one year, or how steady deposits are. A partner reads those in bank statements and tax returns. Use the worksheet to frame the request (how big the gap is and how long it lasts), then compare funding offers in dollars. The term loans page covers needs that last longer than a year, and the article on what working capital covers covers its uses.
The Danville, IL owner guides cover licenses and permits as well.
By Birchbank Business Capital ยท Updated