Working Capital Ratio

Accounting Dictionary

Working Capital Ratio

Current Assets-Current Liabilities.

This ratio measures the short-term bill paying ability of a company. The higher the ratio is, the more likely the company will be able to pay the bills that come due this year. If a company has current assets of $4000 and current liabilities of $2000, their current ratio is 2 ($4000/$2000).

Sign Up to Learn More!

Join our mailing list today to get notified of new discount offers, course updates, Roger CPA Review news, and more!