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1. Working Capital Cycle Cash flows in a cycle into, around and out of a business. It is the business's life blood and every manager's primary task is to help keep it flowing and to use the cashflow to generate profits. If a business is operating profitably, then it should, in theory, generate cash surpluses. If it doesn't generate surpluses, the business will eventually run out of cash and expire. The faster a business expands, the …

…are high relative to your sales. Other working capital measures include the following:  Bad debts expressed as a percentage of sales.  Cost of bank loans, lines of credit, invoice discounting etc.  Debtor concentration - degree of dependency on a limited number of customers. Once ratios have been established for your business, it is important to track them over time and to compare them with ratios for other comparable businesses or industry sectors.