Why 2:1 is considered as ideal current ratio?
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Answer Posted / kushal jani
This is ideal because if a company has more current assets than current liabilities it can easily meet short term financial obligation.
it shows the company has maintained it's assets and liabilities according to the condition.
if the current ratio is below one then company has more current liabilities than current assets which shows company may face problems to meet the short term financial obligation.
If the company has too high current ratio, which shows company is not using it's assets effectively.
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