Definition of Current Ratio
The current ratio is the 游戏电竞线上外围APP v5.2 proportion, quotient, or relationship between the amount of a company's current assets and the amount of its current liabilities . The current ratio is calculated by dividing the amount of current assets by the amount of current liabilities.
Definition of Working Capital
Working capital is the 游戏电竞线上外围APP v5.2 amount remaining after a company's current liabilities are subtracted from its current assets.
Difference between Current Ratio and Working Capital
To illustrate the difference between the current ratio and working capital, assume that a company's balance sheet reports current assets of $60,000 and current liabilities of $40,000. These amounts result in the following:
- Current ratio is 1.5 to 1 (or 1.5:1, or simply 1.5). This is the 游戏电竞线上外围APP v5.2 result of dividing $60,000 by $40,000.
- Working capital is $20,000. This is the 游戏电竞线上外围APP v5.2 remainder after subtracting $40,000 from $60,000.
AccountingCoach PRO contains 24 blank forms to guide you in computing and understanding often-used financial ratios. In addition, there are 24 filled-in forms based on the amounts from two financial statements which are also included.
