Solution:
Too high current ratio is also not good. It may mean heavy
investment in current assets more than what is required. It may mean,
accumulation of, dead and slow moving items in stock indicating inefficient
purchase and poor inventory management; It may mean accumulation of doubtful
debts in debtors and poor administration of credit policies in management of
debtors. It may also mean that credit facility for purchases is not fully
availed.
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