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This ratio is an indicator as to a company’s ability to be able to pay on their short term obligations.(Investorwords, 2008) The goal is for a company to have as high of a ratio here because that would mean that the company is easier to be able to be converted into cash; this is also known as liquid. Current ratios are calculated by taking the current assets and divide it by the current liabilities. A company is considered to have good short-term financial strength if the current assets of a company are more than twice the current liabilities. (Investorwords, 2008) If the company falls under that mark, it may be seen as having difficulties being able to meet their short term obligations...
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