Category Archives: Bookkeeping

Working Capital Ratio: What Is Considered a Good Ratio?

At the end of the day, having completed a sale does not matter if the company is unable to collect payment on the sale. Certain balance sheet accounts are more important when considering working capital management. Though working capital often entails comparing all current assets to current liabilities, there are a few accounts more critical […]

Working Capital Turnover Ratio Definition & Calculation

Effective inventory management is vital for improving your working capital turnover. This involves not only reducing excess stock to free up capital but also ensuring that inventory levels are aligned with current demand trends. This working capital turnover ratio of 5 indicates that for every dollar of working capital, the company generated $5 in sales, […]

Working Capital Ratio Formula Example Calculation Analysis

Therefore, companies that are using working capital inefficiently or need extra capital upfront can boost cash flow by squeezing suppliers and customers. Accounts receivable balances may lose value if a top customer files for bankruptcy. Therefore, a company’s working capital may change simply based on forces outside of its control. Populate the schedule with historical […]