JoAnn Lombardi – Calculating the Working Capital for a Business

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.

Example:

  • 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

Calculating the Working Capital for a Business

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.