How do you calculate current ratio from working capital?

You cannot directly calculate the current ratio from working capital alone. However, you can use working capital as one of the components in the current ratio formula.

 

The formula to calculate the current ratio is:

Current Ratio = Current Assets / Current Liabilities

 

where Current Assets are the assets that can be easily converted into cash within one year, and Current Liabilities are the debts that are due within one year.

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