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Compare different-sized fictional issuers
| Issuer | Current assets | Current liabilities | Net working capital | Current ratio |
|---|---|---|---|---|
| A | 900 | 500 | 400 | 1.8× |
| B | 90 | 50 | 40 | 1.8× |
Explain the scale difference
Both issuers have the same current ratio because their assets and liabilities differ by the same common scale factor. Their net working capital amounts differ by a factor of ten. Neither statistic alone proves which issuer can meet a particular payment.
Keep the output units explicit
Net working capital has the amount units of the statement, such as thousands or millions. The current ratio is dimensionless and can be expressed as a multiple. Mixing their labels can turn a correct calculation into an incorrect interpretation.
Inspect what makes up the asset amount
A positive difference can include inventory or receivables that are not immediately available cash. Use the component breakdown and maturity schedule for the actual liquidity question.