Stock Working Capital Ratio

Stock Working Capital Ratio =         Stock
                              -----------------------
                                  Working Capital
Standard Ratio = 1:1

Stock is an item in the total Current Assets.

Current Assets - Current Liabilities = Working Capital

Therefore stock should not exceed the Working Capital.

If Stock is greater than WC then it indicates there will be a fall in the value of stock in the near future.

Therefore Working Capital should always be greater.

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