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You can use same data to compute both net working capital or current ratio. Do you agree? Please comment.
Yes agreed. Net working capital is the difference between the net assets and the current liabilities. Current ratio can also be used by the same parameters used as above.
you use the same data, but in the current ratio it is a ratio and in the net working capital it is a value.
No much current indept on accounting.
Yes agreed. But the calculation skip my memory.
I am not from a commerce background but know that working capital is an amount you have to run any business and liabilities are for which you have to pay so, the final amount left for the business is the net working capital after subtracting liabilities. The current ratio may be working capital to liabilities in %.
Yes, perfectly correct as for calculating net working capital current assets & current liabilities amount is required (calculated as current assets - current liabilities) and current ratio also current assets & current liabilities amount is required (calculated as current assets / current liabilities).
yes agree to cosider net working capital is the asset mius liability
Net working capital is directly related to the current ratio, otherwise known as the working capital ratio. The current ratio is a liquidity and efficiency ratio that measures a firm's ability to pay off its short-term liabilities with its current assets
The working capital ratio is defined as the amount of a company's current assets divided by the amount of its current liabilities. Hence, the working capital ratio is the same as the current ratio.
