The working capital ratio, calculated by dividing current assets by current liabilities, measures a company’s short-term financial health and operational efficiency. A ratio above 1 indicates that a company has sufficient assets to cover its liabilities, while a ratio below 1 may signal potential liquidity issues. This formula is crucial for investors and managers to assess a business’s ability to meet its short-term obligations.
Reimagine Your Order-To-Cash with AI
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Emagia is a leading provider of AI-powered Order-to-Cash (O2C) automation platform that modernizes finance operations for midsize to large global businesses. Many global businesses and shared service centers use Emagia’s Enterprise Receivables Management System to transform to digital world-class operations in credit, invoicing and payments, receivables, collections, deductions, cash application and cash forecasting. Emagia solutions improve their customers DSO, cash flow, credit risk, operational cost, compliance and profitability.
