The ideal level of current ratio is ........

Accountancy (Phase -I & II) Ratio analysis

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The ideal level of current ratio is

4:2

2:1

Both a and b

None of the above

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Explanation:

The ideal current ratio is 2: 1. It is a stark indication of the financial soundness of a business concern. When Current assets double the current liabilities, it is considered to be satisfactory. Higher value of current ratio indicates more liquid of the firm's ability to pay its current obligation in time.