The working capital ratio is an indicator of the efficiency of a company's management of stocks, debtors and creditors, it is:
(stocks + trade debtors - trade creditors) ÷ sales
If the working capital ratio is 0.2, this means the company needs 20p of working capital for every £1 of annual sales. If annual sales increase by £100,000 of then the company will have to invest £20,000 in working capital to be able to meet this.
Decomposition of working capital changes
The working capital ratio is equal to:
stock turnover + trade debtors/sales - trade creditors/sales
The second term (trade debtors/sales) is closely related to, and measures exactly the same thing as debtor days, while the third (trade creditors/sales) is a multiple of a (usually) good approximation for creditor days.
This can be used to analyse changes in working capital in terms of these three: so given a change in working capital you can look at these to see what caused it.