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
The debt structure was different for real estate companies, with a much higher presence of long-term liabilities, resulting in a higher working capital ratio
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.