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    Question

    What will be the Net Working Capital (NWC) of a company

    if its Current Ratio = 1?
    A Positive Correct Answer Incorrect Answer
    B Negative Correct Answer Incorrect Answer
    C Nil Correct Answer Incorrect Answer
    D Neutral Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    β€’ Current Ratio = Current Assets Γ· Current Liabilities. β€’ If the ratio = 1, it implies: Current Assets=Current Liabilities β€’ Net Working Capital (NWC) = Current Assets βˆ’ Current Liabilities. β€’ Therefore, if both are equal, NWC = 0 (Nil).

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