Working Capital Ratio is another simple but important Key Performance Indicator (KPI). 

The Working Capital Ratio will help determine how well a business is using its cash.

Cash is one of the life lines of business.  When it is restricted it can affect the ability of the business to grow and improve.

The Working Capital Ratio is Calculated as Current Assets / Current Liabilities.

When the ratio is greater than 1 the cash position is positive and when less than 1 the cash position is negative.

The Working Capital Ratio helps determine whether or not a business has enough short term assets to cover it short term debts.