Working Capital Ratio -

The working capital ratio, also called the current ratio, is a liquidity ratio that measures a firm’s ability to
pay off its current liabilities with current assets. The working capital ratio is important to creditors because it
shows the liquidity of the company. Current liabilities are best paid with current assets like cash, cash
equivalents, and marketable securities because these assets can be converted into cash much quicker than
fixed assets. The faster the assets can be converted into cash, the more likely the company will have the cash
in time to pay its debts. The reason this ratio is called the working capital ratio comes from the working
capital calculation. When current assets exceed current liabilities, the firm has enough capital to run its day-
to-day operations. In other words, it has enough capital to work. The working capital ratio transforms the
working capital calculation into a comparison between current assets and current liabilities. In the form of a
formula, this ratio may be express as follows:

Working Capital Ratio = Current Assets

Current Liabilities

Working Capital Ratio of Asian paints

particulars 2014-15 2015-2016 2016-2017 2017-2018 2018-2019

Current assets 4,169.27 4,497.56 5,429.88 5,501.09 6,053.35

Current liabilities 2,757.82 3,065.84 2,875.73 3,398.96 3,716.19

Ratio 1.51 1.46 1.88 1.61 1.62

Average – 1.1616 S.D -0.653 C.V -0.523 Min -1.46 Max -1.88

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Working Capital Ratio of Asian paints

particulars 2014-15 2015-2016 2016-2017 2017-2018 2018-2019

Current assets 4,169.27 4,497.56 5,429.88 5,501.09 6,053.35

Current liabilities 2,757.82 3,065.84 2,875.73 3,398.96 3,716.19

Ratio 1.51 1.46 1.88 1.61 1.62

Average – 1.1616 S.D -0.653 C.V -0.523 Min -1.46 Max -1.88

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4.5
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3.5
3
2.5
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1.5
1
0.5
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Category 1 Category 2 Category 3 Category 4

Series 1