how to calculate working capital on the balance sheet working capital is more reliable than almost any other financial ratio or balance sheet calculation because it tells you what would remain if a pany took all its short term resources and used them to pay off all its short term liabilities what is working capital definition of working capital working capital is the amount of a pany s current assets minus the amount of its current liabilities example of working capital let s assume that a pany s balance sheet dated june 30 reports the following amounts total amount of current assets is $323 000 tot how to calculate a working capital balance sheet calculating the working capital position is an important management responsibility when you run a small business the figures for current assets and current liabilities should be readily available how do you calculate working capital investopedia working capital represents a pany s ability to pay its current liabilities with its current assets working capital is an important measure of financial health since creditors can measure a working capital formula how to calculate working capital the working capital formula is current assets minus current liabilities the working capital formula measures a pany’s short term liquidity and tells us what remains on the balance sheet after short term liabilities have been paid off working capital can be positive or negative and is used for managing cash flow

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