the turnonver and the working capital ratio

[sam0001]

hey guys! just a quick question, if the debtors turnover or stock turnover were to increase, would this have any effect on the working capital ratio?

[RossiJ]

think to yourself, what is the working capital ratio.... (current assets/current liabilities)
debtors is an asset, stock is an asset, and an increase in both means that the debtors control and stock control is probably increasing (cash tied up in both of them)

therefore the working capital ratio will increase (even though it resulting in an increase due to unfavorable circumstances)

[boppyhead]

I disagree, if DTO increases, we will have more debtors control and less cash at bank. These are both current assets and so this will have NO effect on your WCR.

I'm not sure on the STO one. But i think it would be improved WCR as there is more stock on hand. But this is a very superficial analysis and doesn't actually look at the components of the indicator.