|
|
| Working
Capital Ratio (Current Ratio) |
= |
Current
Assets |
|
Current
Liabilities |
|
Indicates
if a firm has enough short-term assets to cover its immediate liabilities.
Things
to remember |
- If
the ratio is less than one then they have negative working
capital.
- A
high working capital ratio isn't always a good thing,
it could indicate that they have too much inventory or
they are not investing their excess cash.
|
[Click
on the image(s) above to see the financial statements] |
For
Cory's Tequila Co. |
$4,615 |
=
1.54 |
$3,003 |
|
This
ratio indicates whether a company has enough short term assets to
cover its short term debt. Anything below 1 indicates negative W/C
(working capital). While anything over 2 means that the company
is not investing excess assets. Most believe that a ratio between
1.2 and 2.0 is sufficient, Cory's Tequila Co. seems to be comfortably
in this area.
If you wanted to take this ratio a step further then you could try
the Acid Test/Quick Ratio -
it is a more strenuous version of the W/C, indicating whether liabilities
could be paid without selling inventory.
|
 |
|
|
){kind=small}
