A positive working capital ratio (greater than 1) is desirable. The higher the working capital ratio, also called the current ratio, the better the company’s liquidity to pay obligations once the short-term assets are converted to cash. Working capital ratio (current ratio) = current assets ➗ current liabilities Why it’s Important Reserve margin working capital-additional working capital needed for unusual circumstancesĬorporate finance analyzes financial statements to compute ratios used in the management of working capital.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |