A current ratio of between 1.0-3.0 is pretty encouraging for a business. As will large amounts of Accounts Receivable and Cash amongst other things. As any business person will tell you keeping inventory is not cheap. Creditors are more willing to extend credit to those who can show that they have the resources to pay obligations.
A large inventory will yield a good current ratio.

The current ratio is calculated from balance sheet data using the following formula: Current ratio = Current assets / current liabilities If a business firm has \$200 in current assets and \$100 in current liabilities, the calculation is \$200/\$100 = 2.00X. Lack of short term investment opportunities. High Current Ratio Stocks Here are 15 stocks with relatively heavy volume (over 500,000 shares daily) and a high current ratio (over 3), according to … This relationship can be expressed in the form of following formula or equation: The current ratio is an accounting metric that provides one measure of liquidity. As will large amounts of Accounts Receivable and Cash amongst other things. The Current Ratio is a liquidity ratio used to measure a company’s ability to meet short-term and long-term financial liabilities. It is a measure to determine the company’s ability to pay its current liabilities through its current assets. A higher current ratio indicates strong solvency position and is therefore considered better. A low liquidity ratio means a firm may struggle to pay short-term obligations. Current Ratio measures the liquidity of the organization so as to find that the firm resources are enough to meet short term liabilities and also compares the current liabilities to current assets of the firm; whereas Quick Ratio is a type of liquid ratio which compares the cash and cash equivalent or quick assets to current liabilities

A current ratio that is in line with the industry average or slightly higher is generally considered acceptable. There may be slow moving of stocks. High Ratio. The current ratio uses all of the company’s immediate assets in the calculation. Microsoft, for example, had amassed a cash horde of nearly \$60 billion (yes billion) until in 2004 it announced a one-time dividend of \$32 billion to its shareholders. If Current Assets > Current Liabilities, then Ratio is greater than 1.0 -> a desirable situation to be in. A high liquidity ratio indicates that a business is holding too much cash that could be utilized in other areas. Is Low or High Better on Financial Ratios? In general, a current ratio between 1.2-to-1 and 2-to-1 is considered healthy. Net profit margin or simply profit margin is a financial ratio that is calculated by dividing net... Current Ratio. Reasons of Low Current Ratio

Quick Ratio: The quick ratio is an indicator of a company’s short-term liquidity, and measures a company’s ability to meet its short-term obligations with its …

This means that a company has a limited amount of time in order to raise the funds to pay for these liabilities. The current ratio uses all of the company’s immediate assets in the calculation. Current Ratio (Year 1) = 656 ÷ 464 = 1,41.

As a banker’s rule of thumb, the standard for current ratio is 2:1. The drawback of maintaining a high quick ratio is that you may not be making effective use of your cash to grow your business. Acceptable current ratios vary from industry to industry. Thus, we calculate it by dividing the current/short-term assets by the current/ short-term liabilities. More cash balances are kept idle in banks. The current ratio is calculated from balance sheet data using the following formula: Current ratio = Current assets / current liabilities If a business firm has \$200 in current assets and \$100 in current liabilities, the calculation is \$200/\$100 = 2.00X.
A large inventory will yield a good current ratio.