Current ratio is the ratio between the current assets and current liabilities of firm. It shows the rupees of current assets available for each rupees of current obligation. This ratio helps the company to determine the desirable liquidity position to meet its maturity obligation so that the company may neither suffer from lack of liquidity nor too high liquidity. Higher the current ratio better the liquidity position is for many types of business 2:1, the company may have an excessive investment in current assets that do not produce satisfied return.
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