working-capital ratio

Cash Asset Ratio

A ratio of a company's cash and liquid assets to its total liabilities. A cash asset ratio measures a company's liquidity and how easily it can service debt and cover short-term liabilities if the need arises. As a result, potential creditors use this ratio in determining whether or not to make short-term loans. It is also called the liquidity ratio and the current ratio.

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.

working-capital ratio

a measure of a firm's ability to pay its short-term liabilities out of CURRENT ASSETS, which expresses the firm's current assets as a ratio of CURRENT LIABILITIES. See also CURRENT RATIO, WORKING CAPITAL, CASH FLOW.
References in periodicals archive ?
A bank may have loan covenants that say they can have only a certain kind of working-capital ratio or debt-to-equity ratio.
A bank will usually consider giving a company financing if it has shown a profit for the last three years of operation, has a working-capital ratio better than 125%, and a debt-to-worth ratio less than 2:1.
This is always vital and it is important to choose appropriate measures here for each period - eg, the quick or acid-test ratios in the short term; the current or working-capital ratios in the medium term; and asset acquisition and disposal programmes in the long term.
If your organization's key working-capital ratios, such as current assets to current liabilities, fall outside its industry's benchmark norms, then something may be wrong, and you need to examine the situation further to determine the cause.