Operational cash cushion.

Working capital is the cash cushion a business has after netting current assets against current liabilities. It's the buffer that funds day-to-day operations: paying suppliers, covering payroll, stocking inventory. Positive working capital means the business can fund itself; negative means it depends on constant collections to stay afloat.

800k current assets minus 500k current liabilities = 300k working capital. Against 3M annual revenue, that's 10% of revenue - a typical buffer for a growing business. Below 5% leaves little room for error; above 20% can signal idle capital that could be invested or returned to shareholders.

Some industries run negative working capital successfully. Supermarkets and fast-food chains collect cash from customers before paying suppliers, so current liabilities legitimately exceed current assets without financial distress. For most other businesses, negative working capital is a warning sign - a quarter of late customer payments and the business can't meet payroll.

Quick example

With current assets of 800,000 and current liabilities of 500,000 (plus annual revenue of 3,000,000), the result is 300,000.00. Change any figure and watch the output shift — it's often more useful to see the pattern than to memorise the formula.

Which inputs matter most

You enter Current Assets, Current Liabilities, and Annual Revenue. Not every input has equal weight. Flip one at a time toward extreme values to feel which ones move the needle most for your situation.

What's happening under the hood

Working capital = current assets - current liabilities. % of revenue = WC ÷ revenue × 100. Current ratio = current assets ÷ current liabilities. The formula is listed in full below. If the number looks off, you can retrace the calculation by hand — that's the point of showing the working.

What the score tells you

Headline financial numbers — income, savings, debt — each tell part of the story. This calculation stitches several together into a single read you can track over time. The value is in the direction, not the absolute number.

What this doesn't capture

The score is a composite of the inputs you provide. Life context — job security, family obligations, health, housing — doesn't appear in the math but shapes the real picture. Use the number as a prompt, not a verdict.