The formula, and what the gap costs to fund.
Working capital is current assets less current liabilities. Working out the number takes a minute, and knowing what it costs to fund the shortfall takes the tool beside this.
Last reviewed 8 September 2026
Indicative interest cost
Weekly
$202/week
Indicative only. Not a quote or offer of credit. Actual rates, fees, and repayments depend on the business profile and the lender's decision.
Sending to Prospa
Your $150,000 scenario
$75,000 drawn at 14.00% . Prospa will ask a few quick questions, then provide a firm quote and funding if eligible.
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What this tool calculates
The tool prices a facility. The formula is worked below in prose.
The interactive calculator on this page produces the indicative cost of funding a working capital gap. It does not compute the working capital formula itself, because that is a calculation from a balance sheet rather than from three sliders. The formula, the ratio and a worked New Zealand example are set out below, and they take a couple of minutes with a set of accounts. Labelling a funding calculator as something it is not would be a figure that misdescribes what it measures.
The formula
Two lines, and what goes on each side.
Current assets are cash, bank balances, trade receivables, inventory held for sale and prepayments. Anything the business intends to keep and use, such as vehicles, plant or premises, sits outside this.
Current liabilities are trade payables, GST and PAYE due, wages accrued, the next twelve months of any term facility, accrued expenses and any revolving facility drawn.
Subtracting gives working capital in dollars. Dividing gives the current ratio, which lets businesses of different sizes be compared. Both are calculated at a moment in time, and both change every day the business trades.
Working capital
CA less CL
Current ratio
CA over CL
Current assets
Convert within 12 months
Current liabilities
Due within 12 months
Worked example
A New Zealand wholesaler, line by line.
Illustrative figures. How any particular item is classified is a question for the business’s accountant.
| Current assets | Amount | Current liabilities | Amount |
|---|---|---|---|
| Bank | $35,000 | Trade payables | $180,000 |
| Trade receivables | $290,000 | GST payable | $42,000 |
| Inventory | $210,000 | PAYE and wages accrued | $28,000 |
| Prepayments | $15,000 | Current portion of term debt | $36,000 |
| Revolving facility drawn | $44,000 | ||
| Total | $550,000 | Total | $330,000 |
| Working capital | $220,000 | Current ratio | 1.67 |
Illustrative on stated assumptions. Not a template for classification.
Reading it
Why a healthy figure can sit beside an empty account.
The business above has $220,000 of working capital and $35,000 in the bank against $70,000 of tax and wages falling due. Everything else on the asset side is receivables and inventory, both of which are real and neither of which pays a wage bill on Friday.
That is the central limitation of the measure. It describes a position at a date rather than a flow through a month, and a business managed on the position alone will be surprised by the flow regularly. The cash conversion cycle adds the timing, and it has its own calculator page.
It is also why the funding tool on this page is useful alongside the formula. Knowing the position tells a business whether it is solvent in the short term. Knowing what a facility costs tells it what closing the gap is worth.
What the tool does
The arithmetic behind the figures, and what it leaves out.
In its scheduled mode the calculator applies the standard amortising formula, spreading an amount and its interest evenly across the term and converting the monthly result to a weekly one. In its revolving mode it does something simpler and more honest for a facility that never amortises, calculating the interest cost of an average drawn balance rather than a repayment that would not exist.
It excludes every fee. Establishment fees, documentation fees, monthly line fees, minimum service charges, audit fees and disbursements are all real and none of them is here, because they vary by funder in ways no formula can anticipate. On a receivables facility the service fee alone can be a sixth of the total cost, so the figure produced here is a floor rather than an estimate.
It also excludes GST treatment, any tax effect, and anything specific to a business. It is a way of seeing how amount, rate and term interact before a conversation with a funder, and it is not a quote, an application or an offer of credit. Nothing entered here is transmitted anywhere.
References
Sources
- Reserve Bank of New Zealand, interest rate statistics
Context for why indicative rate bands move over time rather than being fixed figures.
- Commerce Commission
The regulator whose guidance covers fee disclosure and representations about cost.
- External Reporting Board
The publisher of the standards governing how current assets and liabilities are classified.
- Inland Revenue, GST
The published source for GST as a current liability with fixed due dates.
- Financial Markets Authority, financial advice
Backs the distinction between general information of this kind and regulated financial advice.
FAQ
The working capital calculation, questions
What is the working capital formula?
Current assets less current liabilities, where both mean items expected to convert or fall due within twelve months. Dividing rather than subtracting gives the current ratio, which allows businesses of different sizes to be compared.
Does this page compute the formula for me?
No, and that is deliberate. The formula needs a balance sheet rather than three sliders, so it is worked through above with a New Zealand example instead. The interactive tool prices a facility, which is the other half of the question.
What is a good current ratio?
It varies enormously by sector, and composition matters more than the number. A ratio of 1.5 built from current receivables and fast-moving stock is stronger than 2.5 built from aged debt and slow inventory.
Why does drawing on a facility not improve working capital?
Because it adds cash and adds a current liability of the same amount. What moves the figure is trading profitably, collecting sooner or holding less stock, rather than borrowing.
Is negative working capital always bad?
No. A business paid before it pays its suppliers produces a negative figure by design, which is a sign of strength. The question is whether it comes from being paid first or from being unable to pay.
Are the figures here quotes?
No. Everything on this page is indicative and illustrative, calculated on stated assumptions. Actual rates, fees and terms come from a lender after assessment, and nothing here is an offer of credit.
Does the calculator include fees?
No. Establishment, line, service, audit and minimum fees are all excluded because they vary by funder. On a receivables facility the service fee alone can be a sixth of the cost, so the figure here is a floor.
Is anything entered here transmitted?
No. The calculator runs entirely in the browser, nothing is sent anywhere and no personal details are collected on this site at all.
Related
Keep exploring
What working capital is
The formula, the ratio, and what they miss.
Read onCash conversion cycle calculator
The timing this measure leaves out.
Read onAll eight facilities
What funds a gap once it has been measured.
Read onAbout the calculator
The formula behind the figures, and its limits.
Read on