Working capital ratio is a measure of a business’s ability to pay off short-term obligations. It looks at the company’s liquidity and financial health, and provides an indication of how efficiently it is managing its finances. To calculate the number, simply divide current assets by current liabilities. A good working capital ratio is typically around 2:1 or higher, meaning the company should have at least twice as many assets as liabilities in order to be considered financially healthy. Understanding this ratio can give you valuable insight into a business’s performance and help you decide whether to invest in it or not.