About this report
The Working Capital Ratio is commonly used to assess the financial health of a business. It provides a glance at the businesses’ ability to pay debts in the short-term. The calculation is simply Current Assets divided by Current Liabilities and expressed as a percentage.
A Working Capital Ratio of around 200% is seen as a healthy indication of the business’ liquidity. Whilst if the ratio is less than 100%, it is seen as a warning sign. This would indicate a time to watch the business cash flow and maybe getting advice on a long-term plan.