Working capital ratio(redirected from Working-Capital-to-Sales Ratio)
Working capital ratio
Working capital expressed as a percentage of sales.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
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.
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