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why current ratio is 2:1.why it is not 100:1,10:1,20:1 in
current ratio. please tell me....
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Answer Posted / guest
current ratio is 2;1, An indication of a company's ability to
meet short-term debt obligations; the higher the ratio, the
more liquid the company is. Current ratio is equal to current
assets divided by current liabilities. If the current assets
of a company are more than twice the current liabilities, then
that company is generally considered to have good short-term
financial strength. If current liablities exceed current
assets, then the company may have problems meeting its short-
term obligations
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pass journal entries
