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Net Working Capital Vs. Current Ratio

You can use same data to compute both net working capital or current ratio. Do you agree? Please comment.

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Question added by Deleted user
Date Posted: 2014/08/05
Abdul Mannan Aslam
by Abdul Mannan Aslam , ChiefAccountant , Salam Studio and Stores

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.

Amaresh Singh
by Amaresh Singh , Asst. Manager - Accounts , Shreyas Relay Systems Ltd

yes... NWC= CA-CL and C ratio= CA/CL

Khaled Abdelrehim ACCA DipIFR CMA
by Khaled Abdelrehim ACCA DipIFR CMA , Financial Analysis Assistant General Manager , Khalda Petroleum Company

you use the same data, but in the current ratio it is a ratio and in the net working capital it is a value.

Amaigwe joseph
by Amaigwe joseph , Information Technology Officer , Q.F.A Nigeria, Franchisee of Krispy Kreme Nigeria, Scoopd, Dodo Nigeria

No much current indept on accounting.

ISA AZARE MAGAJI
by ISA AZARE MAGAJI , Lecturer , Federal university, Dutse, Jigawa State, Nigeria

Yes agreed. But the calculation skip my memory.

Mohammad Irshad Khan
by Mohammad Irshad Khan , Self employed , Northern Test Agency LLP

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 %.  

Rajesh Ameta
by Rajesh Ameta , Accounts And Finance Manager , Ameta & Associates

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). 

Hossam  Bridan
by Hossam Bridan , Oil And Gas Drilling Supervisor , AQP

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

Muhammad Manzoor Abbasi
by Muhammad Manzoor Abbasi , HSE Supervisor , Alfanar Co

Not interested to answer this question, ready to attend face to face interview.

Rana Arif
by Rana Arif , Finance Manager , Al forsan contracting Pvt ltd Islamabad

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.

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