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    Description of Current Ratio

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    The current ratio in the company, for which you are a financial analyst, is 3 to 1. The average for other firms in the industry is 1.6 to 1. Management has asked you to evaluate the company's ratio, and explain why it is nearly twice the industry's average. What factors are responsible for the difference? Are we better off than our competitors, or worse?

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    Current ratio measures the liquidity position of the organization. It indicates the ability to pay the short term obligations of the organization. It is computed by Current Assets/Current Liabilities

    If the current ratio is ...

    Solution Summary

    The response discusses current ratio as a way to tell if a company is better off than its competitors in 135 words with 1 reference.