Calculating the Working Capital that You Have Available
By JoAnn Lombardi, Pres. VR Business Brokers
The formula for working capital can be expressed as:
Current Assets – Current liabilities = Working Capital
Current assets – What can be converted to cash within one year or a normal operating cycle.
Current liabilities – Monies owed that are due within one year.
If a company’s current assets total $300,000, and
- Its current total liabilities are $160,000;
Then its working capital is:
$300,000 – $160,000 = $140,000
There are additional aspects to determining cash flow and other financial aspects of a business.
Contact VR Business Brokers at 1.800.377.8722 for more assistance in establishing the proper value for a business for sale or purchase.