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if the current ratio is 0.5 what is the impact of working
capital
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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 |
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