What do you mean by the working-capital of an organization??? How is it c

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Question

What do you mean by the working-capital of an 
organization??? How is it calculated????? Also Define the 
importance of liquidity ratio along with its formula.

Question Submitted By :: Naveenjoe

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Re: What do you mean by the working-capital of an organization??? How is it calculated????? Also Define the importance of liquidity ratio along with its formula.

Answer
# 1

Working capital is part of capital that is used for day to 
day business requirement(short term). It is calculated by 
deducting current liablities from current assests (Cureent 
assests-current liabilities = WC). 

Current assest divided by current liabilities refers to 
liquidity ratio (CA/CL). It measures liquidity position of 
an orgainisation.

Is This Answer Correct ?

14 Yes

1 No

Abdul Rashid

Re: What do you mean by the working-capital of an organization??? How is it calculated????? Also Define the importance of liquidity ratio along with its formula.

Answer
# 2

working capital is that part of capital which is used for 
day to day oerations like payment of wages various day to 
day bills. it is excess of current assets over the current 
liabilities.

liquid ratio is the ration of liquid assets to the liquid 
liabilities where liquid assets = CA - closing Stock
and liquid liabilities = CL - Bank Overdraft
(refer book jayant mitra for cost and management acoounting)

Is This Answer Correct ?

4 Yes

5 No

Hpotter1987
[Roulac India Investments Advisory P Ltd]

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