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 ?
The applicable financial targets are EBITA margin and net working capital ratio, calculated at three-year-averages.
The first analyzed indicator is the size of working capital ratio (see table 1).
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.
3] = WOR, Working Capital Ratio as a proxy for liquidity
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.
5 inventory tums a year, a 2-to-1 working capital ratio, net equity growth of 5%, a 20% retum on equity and accounts receivable of 35 days outstanding.
Liquidity ratios include current ratio, quick or acid-test ratio, working capital ratio, and others.