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Categories >> Accounting >> Accounting AllOther


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Why 2:1 is considered as ideal current ratio?
 Question Submitted By :: Accounting-AllOther
I also faced this Question!!     Answer Posted By  
# 1
If a company's current ratio is in the range 2:1, then it
is generally considered to have good short-term financial
strength. If current liabilities exceed current assets (the
current ratio is below 1), then the company may have
problems meeting its short-term obligations. If the current
ratio is too high, then the company may not be efficiently
using its current assets or its short-term financing
Is This Answer Correct ?    14 Yes 1 No
Prasanth P
# 2
2:1 is current assets/current liabilities ratio of ideal
Is This Answer Correct ?    14 Yes 2 No
Shailendra Srivastava
# 3
2:1 is the ideal current ratio ,forget the golden
rule,there is no ideal ratio like that, it depends upon the
composition of current assets,if the firm conatains obsolte
stock or aged debtors in their current asses,2:1 is not the
ideal current ratio.
Is This Answer Correct ?    8 Yes 4 No

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