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Working capital is defined as the difference between current assets and current liabilities. Liquidity is generally defined as the ability to pay debts as they
Working capital is defined as the difference between current assets and current liabilities. Liquidity is generally defined as the ability to pay debts as they mature and meet unexpected cash requirements. Consequently, a company with a working capital ratio of 1.9 to 1.0 would generally be regarded as a firm with excellent liquidity because the company has $1.90 of current assets for every $1.00 of current liabilities. True or False.
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