What is the working capital ratio?
Some use the term working capital ratio to mean working capital or net working capital. Working capital is defined as current assets minus current liabilities. When used in this manner, working capital ratio is not really a ratio. Rather, it is simply a dollar amount.
For example, if a company has $900,000 of current assets and has $400,000 of current liabilities, its working capital is $500,000. If a company has $900,000 of current assets and has $900,000 of current liabilities, it has no working capital.
Other people use the term working capital ratio to mean the current ratio, which is defined as the amount of current assets divided by the amount of current liabilities.
Learn more about Financial Ratios.
Suggest a Question
Subscribe to Q&A
Comments
4 Responses to “What is the working capital ratio?”
Leave a Reply




what is capital/assets ratio farmula
working capital = current assets - current liabilities
cma par1 explanation plus exams. thanks
thanx 4 what u deliver 2 my country and my people on this basic knowledge of acconting and finance in general,may god help u ,nice dutythanx in advance