To calculate the ratio, divide a company’s net sales by its average working capital. A working capital loan is a loan taken out by a business specifically to pay for its day-to-day needs.

Need a financial cushion for your business? Discover what is a working capital loan and how it can help with short-term ...

Working capital management is the process of overseeing and controlling a company’s short-term assets and liabilities to ensure efficiency and enough liquidity to meet day-to-day expenses.