When higher working capital isn't better
It follows that higher working capital is better than a lower amount of working capital. However, it's not quite simple (it rarely is in investing) because a high amount of working capital can imply a company is unnecessarily tying up cash that could be used elsewhere. And looking at a company's working capital in the context of its industry makes sense.
For example, within auto parts retailers, Advance Auto Parts (AAP +2.31%) has a history of underperforming its peers AutoZone (AZO +2.52%) and O'Reilly Automotive (ORLY +2.83%) in terms of cash management. It doesn't do a great job of collecting receivables from customers or a great job of taking longer to pay suppliers.
As such, its working capital requirement, and by definition, its current ratio, is higher than its peers. Although that's usually not a bad thing from a liquidity standpoint, it does mean the company ties up more cash in running its business than its peers.
If you are wondering how AutoZone and O'Reilly can run such low working capital (and current ratios below 1), recall that these figures are just a snapshot of a company's accounts. They are retailers and will receive millions in cash and credit through their stores in a few days of trading.