Net Working Capital Ratio, often synonymous with the net capital ratio, is a financial metric that assesses a company’s short-term liquidity by comparing its current assets to current liabilities. This ratio indicates the firm’s ability to cover its short-term obligations with its short-term assets, thus reflecting operational efficiency and financial health. A higher ratio suggests better liquidity and financial stability.
Get Your FREE Exam Secrets Cheat Sheet!
Plus a 3-Part CMA Video Course
82,000+ accounting and finance pros got their free CMA cheat sheet.
Get yours too, today!