Why 2:1 is considered as ideal current ratio?
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Answer Posted / prasanth p
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
facilities.
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