Your average working capital is $300,000. Your working capital turnover ratio is 7, or $2.1 million divided by $300,000.

A positive working capital number implies a current ratio above 1. The current ratio is helpful because you can monitor it to gauge the ongoing trend in a company's financial health; a rising ...

The working capital ratio is a very basic metric of liquidity. It's meant to indicate how capable a company is of meeting its current financial obligations and is a measure of a company's general ...

For example, if a company has $100,000 in current assets and $90,000 in liabilities, the company has a working capital of $10,000 but a working capital ratio of 110%. $100,000 / $90,000 = 110% ...

The greater the resultant figure, the better the company's working capital position. The quick ratio covenant determines a company's liquidity – the ease with which its assets are converted to cash.

200,000 / 500,000 = .4, so your Working Capital Ratio is 40%. (Keep in mind lenders often check out your WCR to determine whether you can survive short and longer-term dips in sales and revenue.

Graham notes key ratios and items, such as a company's working capital ratio, current ratio, intangible assets, cash, notes payable, liquidation value, net asset value, and margin of profit.

Conversely, persistently weak working capital, shown by a current ratio that remains stubbornly below 1.0, functions as a real-time profit-and-loss signal.

Working capital is the difference between current assets and current liabilities. Prepaid expenses can be classified as current assets in the calculations.

A current ratio of more than 3, meaning the company has three times more liquidity than it needs, could certainly be an indication that capital is being misused or inefficiently allocated.