The Working Capital ratios indicate how well the company is able to manage its working capital. "The asset management ratios are also known as working capital ratios or the efficiency ratios. The aim is to measure how effectively the firm is managing its assets." (NetTom, n.d.)The following are some of the working capital ratios which indicate the efficiency of the company in managing its working capital.
Liquidity ratio is defined "as a class of financial metricsthatis usedto determine a company's ability to pay off itsshort-terms debts obligations.Generally, the higher the value of the ratio, thelarger is the margin of safetythatthe company possesses to cover short-term debts." (Investopedia, 2009) The above table indicates that the company has efficiently managed its working capital during the year ending September 2009 as compared to the year 2008. Nokia is maintaining a comfortable current ratio and the current ratio of 1.5 implies that the company has sufficient current assets situation which will enable the company to meet its current liabilities without any problem. However the company has increased its long-term debts during the year 2009 with the result that there is an increase in this ratio. This implies that the company will incur additional interest costs on borrowed funds. ...Show more