Working capital ratio

Working capital ratio

Working capital expressed as a percentage of sales.

Working Capital Ratio

Cash and short-term assets expected to be converted to cash within a year as a percentage of the amount of annual sales. Because expansion requires capital on hand, the working capital ratio is considered a prime indicator of a company's ability to expand its operations without taking on additional debt. Perhaps more straightforwardly, it is often known as the working capital to sales ratio.
References in periodicals archive ?
This was achieved by means of strict cash management and a further improvement in the working capital ratio to minus 2.
Further, the table reveals that the net working capital ratio remained fluctuating during the period of study.
Let DWCR represent the difference between the specific working capital ratio observations.
The common measures of liquidity are: Current ratio, Quick ratio, Cash ratio, Net Working Capital (NWC) and Net Working Capital ratio.
While revenue was increasing, the company's working capital ratio dropped by 7%, a big improvement over the previous year.
Inventory in the third quarter was at a similar level compared to the second quarter, and the Company's working capital ratio improved from 178% in the second quarter to 212% in the third quarter.
46 Weighted-average common and dilutive potential common shares outstanding 67,860 67,595 67,644 67,557 Pro forma working capital ratio As of December 31, 2005 Net sales reported $6,620,099 Unilin 10 month net sales 993,407 Pro forma net sales $7,613,506 Net working capital $1,342,382 Working capital ratio 18%
It is a widely held view that an acceptable working capital ratio is two-to-one, or twice as much current assets as liabilities.
The key is to ensure a positive working capital ratio, because a negative ratio is a signal for a business that is heading for financial difficulties.
Current ratio, sometimes referred to as working capital ratio, compares current assets to current liabilities.
The latter programme puts the company in a position to improve its forecast for its working capital ratio in 2014 to under 5% of sales, a level it expects to sustain going forward.
The company continues to maintain a debt-free position and a strong working capital ratio.