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Which type of ratio is specifically let us about the amount of working capital finance requirement of the company?

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Question added by Imtiaz Hussain Bugti , Manager Financial Analytics , Bayan Credit Bureau
Date Posted: 2014/03/15
Ahmed Hashmi
by Ahmed Hashmi , Head of Country Operations

current ratio and quick ration.

Gamiem Gamiet
by Gamiem Gamiet , Senior Credit Manager , Nedbank Private Wealth

The best ratio to use would be the current ratio.

Deleted user
by Deleted user

The working capital ratio (Current Assets/Current Liabilities) 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.

pascaline dang nkou
by pascaline dang nkou , manager , FAISSAL cybercafe

liquidity ratio just as some has said

Niharika Sinha
by Niharika Sinha , Manager , Bank of Baroda

The entire Current Assets, Current Liabilities and collection cycle has to be analysed for arriving at the Working Capital Finance requirements of a Company; however if it has to be just one ratio, it will be Current ratio as its calculation inputs are imperative for any working capital finance assessment.

khalid alamer
by khalid alamer , Manager , AL amer for custom clearance

Sufficient guaranteesreimbursement

SAI ANIMESH KUMAR N
by SAI ANIMESH KUMAR N , Senior Manager, Credit , Ahli United Bank

Hi,

I don't think there is one ratio by which we get to know about WC finance requirement of a company. 

However, as the basic rule goes:

(Bank finance + Sundry creditors + Other current liabilities + Net working Capital) / TCA =1 

Each parameter BF/TCA, S.Cr/TCA etc. will have to be fixed w.r.t the industry and thus we can arrive at the Working Capital Requirement.

 

randy boateng
by randy boateng , CREDIT OFFICER , forbes microfinance

liquidity ratio

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