The net working capital to total assets ratio formula is given as Net Working Capital / Total Assets. This ratio is essential for the manager of a company as it indicates possible lack of funds to continue business operations. If the value of this ratio is negative, it indicates that the company could be facing debts, and it struggles to cover its short-term liabilities. This net working capital to total assets ratio helps to compare the companies working within the same sector.
The net working capital to total assets ratio formula is helpful in evaluating the company's level of liquidity. This ratio is calculated by comparing the net working capital (net current assets) to the company's current liabilities. Just divide the working capital with total assets to find the ratio.