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Working capital and the current ratio are two measures of liquidity. If you are planning to compare two companies, one of which is considerably larger
Working capital and the current ratio are two measures of liquidity. If you are planning to compare two companies, one of which is considerably larger than the other, why would the current ratio be a better measure to use to make the comparison?
The formulas for these two measures utilize the same figures.
Working capital = total current assets minus total current liabilities
Current ratio = total current assets divided by total current liabilities
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