Net Working Capital to Total Asset ratio is a liquidity ratio that expresses the net current assets or working capital of a company as a percentage of its total assets.
The formula is: [Net Working Capital / Net Total Assets] x 100.
Net Working Capital, also known as Working Capital Ratio, is current assets minus current liabilities.
Current assets are liquid cash, and assets convertible to cash within one year. It includes stocks, cash, and cash equivalents available with the company, marketable securities, accounts receivables, inventories, and prepaid expenses.
Current liabilities include accounts payable, notes payable, current maturities of deposits taken, and accrued liabilities
Net Total assets include all current assets, plant and machinery, and property.
Current assets, current liabilities, and total assets make up the line items in the balance sheet.