Companies A and B have equal NWC with amount of 25 000 EUR. But company A has WC of 30 000 EUR and Short term liabilities 5000 EUR. The company B has WC of 50 000 EUR and STL of 25 000 EUR. Which one of this companies is more liquid and explain why.

calculate the Current Ratios for both companies: Company A: WC = 30,000 EUR STL = 5,000 EUR CR = WC / STL = 30,000 / 5,000 = 6 Company B: WC = 50,000 EUR STL = 25,000 EUR CR = WC / STL = 50,000 / 25,000 = 2 Even though both companies have the same Net Working Capital (NWC), Company A has a higher Current Ratio (6) compared to Company B (2). This means that Company A has more current assets relative to its current liabilities than Company B. Therefore, Company A is more liquid than Company B.