if the current ratio is 0.5 what is the impact of working
capital
Answers were Sorted based on User's Feedback
Answer / manoj s
RULE OF THUMB FOR THE CURRENT RATION IS 2:1.. but in this
cases it is 0.5.. hence their current assets are not
enough to meet the current year obligation..Hence, there
is Negative workin capital...
Is This Answer Correct ? | 76 Yes | 1 No |
Answer / tanmaya.10@rediffmail.com
if the current ratio is 0.5 then there not sufficient gross working capital(current assets)to meet the current liabilities.There will be a negative working capital.
Is This Answer Correct ? | 9 Yes | 1 No |
Answer / rashmiranjan rout
Negative of the working capital because according to the rule of thumb current ratio is 2:1 but here current ratio is 0.5 than current liabilities is more than current asset . For this reason the company is unable to meet their short term obligations.A company required (short term fund) working capital to carry out its day to day operations, purchase of raw materials, payment of wages etc.
Is This Answer Correct ? | 3 Yes | 0 No |
what is contingent liabillity ?
How to generate sale invoice in tally (cost of the Item is Rs.25000/- VAT applicable 14.5%
WRITE ABOUT ANY 1 "WOMENS ARE BEST MANAGEMENT PERSON" "IF UR FINANCE MINISTER OF INDIA" "V R RESPONSIBLE FOR OUR ENVIRONMENT"
What is mean by working capital?
Why do you prepare a Trial Balance?
What is the difference of Fund Flow Statement and Cash Flow Statement?
steps for finalisation of accounts and related entries
Define overhead in terms of accounting?
Why Is The Distinction Between Product Costs And Period Costs Important?
If I purchase and sale of goods at same price then effect in trading, P & L A/c
how to pass entry in tally for Interest received on sweep credited to saving a/c? In what group it should be come
Where do we show "Dividend paid in FFS ,either in FFO or in FFS? what is teh concept behind?