The Working Capital category examines your reserves. You do not want too much or too little working capital. There are three criteria:

• You earn 50 points if your Current Ratio is greater than 2.0.

• You earn another 50 points if your Days of Working Capital lies between 30 and 90 days.
  
• You lose your Working Capital points if you had an Emergency Loan.

Working Capital = Current Assets minus Current Liabilities

Current Ratio = Current Assets / Current Liabilities = (Cash + A/R + Inventory) / (A/P + Current Debt)

Days of Working Capital = Working Capital / (Sales/365)

For example, in the sample below, you would earn 50 points for a Current Ratio of 3.2, another 50 points for a Working Capital Days of 65, and you would keep the points because you avoided an Emergency Loan.

ASSETS ($000)				LIABILITIES & OWNER'S EQUITY
Current Assets				Liabilities
Cash	$1,260			Accts Payable		$6,291
Accts Receivable	$7,522			Current Debt		$3,500
Inventories	$22,388			Current Liabilities			$9,791
Current Assets		$31,170		Long Term Debt		$39,000
				Total Liabilities			$48,791
Fixed Assets
Plant & Equip.	$113,800			Owner's Equity
Accum. Deprec.	($45,900)			Common Stock		$18,276
Total Fixed Assets		$67,900		Retained Earn.		$32,003
				Total Equity			$50,279
TOTAL ASSETS		$99,070		TOTAL LIAB. & O.E.			$99,070
Working Capital		$21,378
Current Ratio		3.2
Sales ($000)		$120,000
Days of Working Capital		65.0