Question
What will be the Net Working Capital (NWC) of a company
if its Current Ratio = 1?Solution
• Current Ratio = Current Assets ÷ Current Liabilities. • If the ratio = 1, it implies: Current Assets=Current Liabilities • Net Working Capital (NWC) = Current Assets − Current Liabilities. • Therefore, if both are equal, NWC = 0 (Nil).
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