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Working Capital = Current Asset Minus Current Liabilities and
Current Ratio = Current Assets Divided by Current Liabilities
Current Ratio is the proportion or ratio of current assets to current liabilities. It shows that how many times an entity can cover its current liabilities by current assets (favorable proportion is2 times). Current assets are short term assets (expected realisation within12 months) and Current liabilities are short term liabilities (due within12 months).
Working Capital is the excess of entity's current assets over current liabilities. It is that portion of current assets which remains after deducting the amount of current liabilities from the amount of current assets. This remaining portion of current assets is financed by long term liabilities (long term loans, partners' capital etc).
current ratio shows that company able to pay its current liabilities the higher the ratio is better to repay its current liability.
Working capital means current assets - current liability if the current asset is more the creditors get paid their money quickly. and if the current assets is really too much it is the meaning of not utilizing the funds effectively by the firm or company is thinking of future cash flow problems.
current ration an indicator of company ability to cover its current obligaition from its current assets so that its called ( current )
working capital is measure of work efficiency
in short trem
we must note this ratio it shouldnt be negative thats mean company may meet diffeculties to meet its obligation
and its shouldnt be high becouse this mean that company have excess cash not invested
Current ratio determines the proportion/ratio by which current assets are available to pay the current liabilities of the business.
Current Ratio = Current Assets / Current Liabilities
Whereas the Working Capital measures the liquidity (in terms of amount) of the business to payout its current or short term liabilities/obligations.
Working Capital = Current Asset - Current Liabilities
Current Ratio = Current Assets / Current Liabilities
Working Capital = Current Asset - Current Liabilities
current ratio is current assets/current liability, this indicates firms ability to pay short term obligations
working capital is a measure of the same too however this is the difference between the current assets and current liabilities
*the current ratio is one of the liquidity ratios that measures a company's ability to pay its short and long term.
current ratio = current assets / current liabilities
*working capital is a measure of the company's efficiency and its financial health in the short run.
WC = current assets - current liabilities
