what is days working capital 
days working capital describes how many days it takes for a company to convert its working capital into revenue the more days a company has of working capital the more time it takes to convert that working capital into sales the higher the days working capital number the less efficient a company is sydney saporito investopediaunderstanding days working capitalworking capital also known as net working capital is the difference between a company s current assets like cash accounts receivable and inventories of raw materials and finished goods and its current liabilities like accounts payable and the current portion of debt due within one year the difference between current assets and current liabilities represents the company s short term cash surplus or shortfall a positive working capital balance means that current assets cover current liabilities conversely a negative working capital balance means that current liabilities exceed current assets working capital is a measure of both a company s operational efficiency and its short term financial health although working capital is important days working capital demonstrates how many days it takes to convert working capital into revenue the more days a company has of working capital the more time it takes to convert that working capital into sales in other words a high value of days working capital number is indicative of an inefficient company while negative and positive working capital calculations provide a general overview of working capital days working capital provides analysts with a numeric measure for comparison a low value for days working capital could mean a company is quickly using its working capital and converting it into sales if the days working capital number is decreasing it might be due to an increase in sales conversely if the days working capital number is high or increasing it could mean that sales are decreasing or that perhaps the company is taking longer to collect payment for its payables days working capital formula and calculationdwc average working capital 365 sales revenue where average working capital working capital averaged for a period of time sales revenue income from sales begin aligned text dwc frac text average working capital times text 365 text sales revenue textbf where text average working capital text working capital averaged text for a period of time text sales revenue text income from sales end aligned dwc sales revenueaverage working capital 365 where average working capital working capital averagedfor a period of timesales revenue income from sales working capital is a measure of liquidity working capital is calculated by the following working capital current assets current liabilities where current assets assets converted to cash value within a normal operating cycle current liabilities debts or obligations due within a normal operating cycle begin aligned text working capital text current assets text current liabilities textbf where text current assets text assets converted to cash value text within a normal operating cycle text current liabilities text debts or obligations due within text a normal operating cycle end aligned working capital current assets current liabilitieswhere current assets assets converted to cash valuewithin a normal operating cyclecurrent liabilities debts or obligations due withina normal operating cycle 