Working Capital Ratio
Content
Definition
The Working Capital Ratio, also known as the current ratio, measures a company`s ability to pay off its current liabilities with its current assets, indicating financial health and operational liquidity.
Usage and Context
The working capital ratio measures a company’s ability to pay its current liabilities with its current assets, showing financial health.
Frequently asked questions
- What is the working capital ratio also known as? The working capital ratio is also known as the current ratio.
- What does working capital ratio measure? The working capital ratio measures a company`s ability to pay off its short-term liabilities with its short-term assets.
- What is the working capital ratio and current ratio? The working capital ratio, or current ratio, is calculated by dividing current assets by current liabilities, showing a company`s ability to pay short-term obligations.
Benefits
The working capital ratio shows a company’s ability to cover current liabilities with current assets, reflecting financial health.
Conclusion
The working capital ratio shows a company’s ability to cover current liabilities with its assets, indicating financial health.
