The Working Capital Formula and Current Ratio

Your current ratio and other working capital ratios are important financial metrics used by investors to determine whether or not they should invest in a company. Banks may use them when deciding whether to give you a loan. Do you know what a good current ratio is?

I’ll explain net working capital, the current ratio, and the quick ratio. I show a sample balance sheet and how to calculate the current ratio and quick ratio for it. 

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