if the current ratio is 0.5 what is the impact of working
capital
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Answer Posted / 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.
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