Net Working Capital (NWC) Ratio is a measure of liquidity used to assess a company’s short-term financial health. It compares a company’s current assets minus its current liabilities to determine the available capital that is available for working capital needs. This ratio helps investors and creditors gauge a company’s ability to cover day-to-day expenses and shows how easily a business can pay off its short-term debts. A high ratio could signal good liquidity, whereas a low ratio might mean that the company is running out of cash or unable to generate enough working capital to meet its needs. So, for savvy investors and creditors alike, the NWC ratio provides valuable insights into the stability and growth prospects of any given company.