Working capital ratio

(redirected from Working Capital to Sales 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 net working capital to sales ratio is also known as net working capital intensity and these intensities differ both within industries (which may reflect different managerial decisions and level of vertical of integration), and across industries (e.g.
* Moreover, the interaction terms are negative for the debt/ equity ratio ([l.sub.1]), the profitability rate ([p.sub.1]) and the sales/ assets ratio ([q.sub.1]), but positive for the working capital to sales ratio ([f.sub.1]).
* the working capital to sales ratio is negatively related to growth, and is positively affected at the margin by high inflation, and