Days Working Capital

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DEFINITION of 'Days Working Capital'

An accounting and finance term used to describe how many days it will take for a company to convert its working capital into revenue. The faster a company does this, the better.

To calculate days working capital, the following formula can be used:

 

Days Working Capital

Days working capital can be used in ratio and fundamental analysis.

BREAKING DOWN 'Days Working Capital'

When utilizing any ratio, it is important to consider how this company has evolved over time and how it compares to similar companies in the same industry. By comparing this ratio in a historical and relative basis, you will get a better understanding of how efficient a given company actually is.

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RELATED FAQS
  1. Can working capital be depreciated?

    Working capital as current assets cannot be depreciated the way long-term, fixed assets are. In accounting, depreciation ... Read Full Answer >>
  2. Do working capital funds expire?

    While working capital funds do not expire, the working capital figure does change over time. This is because it is calculated ... Read Full Answer >>
  3. How much working capital does a small business need?

    The amount of working capital a small business needs to run smoothly depends largely on the type of business, its operating ... Read Full Answer >>
  4. What does high working capital say about a company's financial prospects?

    If a company has high working capital, it has more than enough liquid funds to meet its short-term obligations. Working capital, ... Read Full Answer >>
  5. How can working capital affect a company's finances?

    Working capital, or total current assets minus total current liabilities, can affect a company's longer-term investment effectiveness ... Read Full Answer >>
  6. What can working capital be used for?

    Working capital is used to cover all of a company's short-term expenses, including inventory, payments on short-term debt ... Read Full Answer >>
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