Calculate working capital and current ratio from assets and liabilities — a key measure of distributor cash-flow health.
Working capital is current assets minus current liabilities — the cash and near-cash you have to run day-to-day operations after covering short-term dues. For a distributor, it's mostly stock and receivables against supplier credit.
The current ratio (assets ÷ liabilities) is the quick health check. Below 1.0 you can't cover short-term obligations from short-term assets; too high and cash is sitting idle in stock or unpaid invoices.
Current assets ₹5,00,000, current liabilities ₹3,00,000: working capital ₹2,00,000, current ratio 1.67 — a comfortable, healthy level for FMCG distribution.
Roughly 1.5 to 2.0 for FMCG. Stock and receivables dominate current assets, so you want a cushion above 1.0 — but a ratio above 3.0 often means cash is trapped in slow stock or overdue collections.
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