Last answered:

16 Mar 2023

Posted on:

10 Mar 2023


Resolved: current ratio under 2 is good or bad

should current ratio be more than 2 in order to conclude that it is good , why instructor told p&g current ratio is good even it is under 1

1 answers ( 0 marked as helpful)
Posted on:

16 Mar 2023



a current ratio of 2 indicates that the company has $2 of current assets for every $1 of current liabilities.

Whether this is good or bad depends on the specific company and industry. 

For example, if most competitors have a current ratio of 0.1 and ours is 0.7, then this is an indicator of a better liquidity position. 

We need to have a proper benchmark in order to say whether a certain ratio is good or bad. 

I hope this answers your question. 


The 365 Team

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