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What is the Standard Ratio for current ratio?
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Answer:
2:1 is the Standard Ratio for current ratio?
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Introduction:
The current ratio is a liquidity ratio used to evaluate a company's power to pay short-term or one-year obligations. It demonstrates to investors and analysts how a company's balance sheet current assets might be optimised to pay down current debt commitments.
Explanation:
The current ratio gives investors a better knowledge of a company's ability to cover short-term debt with current assets and compare it to rivals and peers.
The ideal ratio is 2:1, which means that every rupee of current liabilities is sufficiently covered by two rupees of current assets.
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