|
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).
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