If a firm has positive net working capital, the current ratio is:

Question

Quizplus · Accepted Answer

When a firm has positive net working capital, it means that its current assets exceed its current liabilities. This indicates that the firm has enough short-term assets to meet its short-term debts. The current ratio is calculated by dividing current assets by current liabilities. Therefore, when the numerator (current assets) is greater than the denominator (current liabilities), the current ratio is greater than one.

If a Firm Has Positive Net Working Capital, the Current