INVENTORY TO WORKING CAPITAL | |||||||||
Definition | |||||||||
This ratio tells how much of a company's funds are tied up in inventory. | |||||||||
Comment | |||||||||
An increasing Inventory to Working Capital ratio is generally a negative sign, showing the company may be having operational problems. If a company has too much Working Capital invested in Inventory, they may have difficulty having enough Working Capital to make payments on Short-Term Liabilities and Accounts Payable. | |||||||||
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