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Credit Industry News from Credit Today…

Current Ratio: A Good Indicator or a False Signal? Let’s riff a little bit this week on one of our favorite ratios – the current ratio. First, for any beginners out there, the current ratio is current assets (anything that can be converted to cash within a year) divided by current liabilities (anything due within a year).  In the “old days,” a 2 to 1 current ratio was something credit execs liked to see. That 2 to 1 seemingly gives you a nice “margin of safety,” knowing that the company you’re looking at has 2 times the current assets as
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