Working Capital as % Sales

Working Capital as % Sales

Current Assets (CA) – Current Liabilities (CL) X 100

Turnover

 

Benchmark: –5%

Working capital (current assets less current liabilities) as a percentage of turnover (sales less sales taxes). In other words the net funds which flow in the company to keep it running, as a proportion of the sales they generate.

The ratio outcome is usually negative because retailers work on negative working capital i.e. current assets values are more than covered by trade credit, bank overdraft etc. (current ratio & quick ratio is less than 1).