The company's world-class supply-chain management system ensured that DSO stayed low. Improvements in inventory turnover increased cash flow, all but eliminating liquidity risk, leaving Dell with more cash on the balance sheet to distribute to shareholders or fund growth plans. The Net Working Capital Formula and the Working Capital Ratio Formula changes in working capital formula are the easiest ways to determine whether your business has the cash flow necessary to meet your debt and operational demands over the next year. To be considered “current”, these liabilities and assets must be expected to be paid...

Let’s say you are a brand new company and we're looking at the balance sheet of your company. You have current assets of $1,000 split between cash ($500) and inventory that you intend to sell ($500). Valuation ratios are used to determine the value of a stock when compared to...