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What is the difference between the current ratio and working capital?

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Question added by Muhammad Hamid , Senior Financial Accountant , Al Rowad Trading Co LLC
Date Posted: 2015/07/24
Shahbaz Hayder
by Shahbaz Hayder , Group Head of Finance , Sharif Group of Companies

Working Capital = Current Asset Minus Current Liabilities and

Current Ratio = Current Assets Divided by Current Liabilities

 

Yusuf Rampurawala
by Yusuf Rampurawala , Audit Supervisor , KPMG Lower Gulf

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). 

Jamaludeen Jana
by Jamaludeen Jana , Senior Accountant - Realty , M/s. Pure Gold Real Estate Development L.L.C

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.

rasha adi
by rasha adi , Financial Controller , nissan - infiniti - Bustami and Saheb

 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 

Hassan Iftikhar Ahmed
by Hassan Iftikhar Ahmed , Purchase Manager , Brixx International Private Limited

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 

 

Muhammad Waqas Lokhandwala
by Muhammad Waqas Lokhandwala , Auditor , MSK International Auditors

The current ratio is  measures whether or not an entity has enough resources to pay its debts over the next12 months. It compares a firm's current assets to its current liabilities.   Working capital is not a ratio, proportion or quotient, but rather it is an amount. Working capital is the amount remaining after current liabilities are subtracted from current assets.  

 

MUHAMMAD GAUHER ALI
by MUHAMMAD GAUHER ALI , ASSISTANT MANAGER ACCOUNTS , M.A.J.FOOD DISTRIBUTION EST.(GANDOUR)

The current ratio is the proportion of the amount of current assets divided by the amount of current liabilities.Working capital is not a ratio, but rather it is an amount. Working capital is the amount remaining after current liabilities are subtracted from current assets.

Muhammad Ahmed Shah
by Muhammad Ahmed Shah , Imports Accountant , DANUBE Co. Ltd. - شركة الدانوب للمواد الغذائية والكماليات

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

Agree with all answers>>>>>>>>>>>>>>>>>>>>>>

Sara Balhareth
by Sara Balhareth , Supply Chain Specialist , Schlumberger - Saudi Arabia

*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

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