A high, or increasing Working Capital to Debt ratio is usually a positive sign, showing the company can liquidate its Working Capital to quickly pay off its debt, if it had to do so. An event like this would usually be rare; often an extreme downturn in the industry the company operates within, or drastically negative happenings within the company.
Nevertheless, monitoring this ratio is very important to make sure the company has the capability to satisfy its creditors. A ratio of 1.0 or higher is desirable, as this shows the company could pay down its debt with Working Capital.
