Working Capital Formula

Support day to day operations with funding from Prospa

The term working capital refers to the difference between current assets and current liabilities – it’s basically the funds (or potential funds) available for a business to use to support day to day operations. A business’s working capital can be quickly determined using a simple working capital formula. The results are an important indicator of the financial health of a business, which is something that lenders look at when they are deciding on how much you can borrow.

Most businesses don’t always have access to large cash surpluses, but the working capital formula also takes into consideration the value of resources and assets owned by the business that can be converted to cash relatively quickly. However, if your business has a long term liability and needs to boost working capital quickly, there are other options available. Prospa offers a small business loan for larger, one-off purchases or a line of credit that is perfect to support your business cash flow in the short term while you focus on growth over the long term.

Support day to day operations

A Prospa Business Line of Credit is a great way to get ongoing support for working capital.

Use it to manage fluctuations in cash flow, pay staff wages, cover accounts payable, bridge unpaid invoices, buy urgent stock, manage seasonal fluctuations or make BAS payments.

Why Prospa? It’s today’s way to borrow.

No more compromising or missed opportunities with Prospa by your side. With hassle-free application, this time tomorrow you could have access to funds for growth and cash flow support. It’s just what we do.

We’re Australia’s #1 online lender to small business.


Borrow up to $500K with 10 minute application, fast decision and funding possible in 24 hours.


Locally focused BDMs backed by a team of dedicated Business Lending Specialists who get to know your client’s business.


Join thousands of Aussie small businesses who thrive with the support of Australia’s #1 online lender to small business.


Frequently asked questions

To work out your working capital, there’s a simple calculation called the ‘Working Capital Formula’. It’s basically Current Assets minus Current Liabilities. Working capital formula (or net working capital formula) is a great way to measure a company’s short term liquidity and gives a clear understanding of what assets are left after short-term liabilities have been finalised.

Financial analysts use the working capital formula and working capital ratio (another quick ratio calculation) when looking at a business’s balance sheet to determine the health of the business and to understand the net working operating capital of the business at any point in time. When a business understands the relationship between assets and current liabilities, there’s a clearer picture of what’s possible in the short and long term. It allows the business to continue day to day operations with confidence, and plan ahead for future growth.

When the working capital formula shows a positive working capital – the business is in good financial health. That means there’s sufficient liquid assets to pay off short term debt and to invest in business growth. However, when the working capital formula calculation shows a negative working capital, the business may be in trouble in the short term.

If your working capital formula points to a negative outcome, you could consider supporting cash flow by borrowing funds. There are many options available if you’re comfortable your business can support short term debt. The Prospa Business Line of Credit offers ongoing access to funds between $2K and $150K. You can use and reuse as often as you like and you only pay interest on what you use. Talk to our friendly customer service team today about finance to support your net working operating capital.

If you’d like to invest in your business, but you don’t have the assets or working capital to pay up front, you can borrow large amounts from many financial services providers. Prospa offers a small business loan of between $5K and $150K with funding possible in 24 hours. Compared to a line of credit this could be considered long term debt – but terms range from 336 months. Improve the financial health of your business today, talk to our friendly customer service team about the Prospa small business loan for investing in business growth and increasing trade.

If you’re looking to get fast access to business finance to help with net working operating capital (or cash flow) start by filling in Prospa’s no obligation online application form. Once we receive the form, one of our friendly business lending specialists will get right back to you to finalise the application and answer any questions you might have. You’ll get a fast decision and funding is possible in 24 hours to approved applicants. With such a hassle-free experience, it’s no wonder more and more small businesses are turning to alternative lenders like Prospa to help them while they turn long term liabilities into working capital.

Once you’ve had a look at the results from your working capital formula, and you decide you need finance, the application process with Prospa takes around 10 minutes and starts with an online form. It’s a good idea to have handy your ABN, driver licence details, basic details about your business (operating years, structure & turnover) & trading business bank account details. For small business loans over $250K, you’ll also need some basic financial statements, like a P&L and cash flow.

Other questions? Talk to a specialist