What is the difference between quick asset ratio and working capital ratio?
Working Capital ratio = current assets / current liabilities It addresses whether a business has enough current assets to meet the payment schedule of its current debts, with a margin of safety for possible losses in current assets, such as stock shrinkage or uncollectable debtors. Quick ratio = (cash + marketable securities + net receivables) / current liabilities Is one of the bets measures of liquidity. This ratio is used to determine the solvency of ones business or its ability to meet its immediate commitments. The main difference between the Working Capital ratio and the quick ratio is that the latter does not include inventories, while the former does.
