A current ratio between 1.5 and 3 usually means you’re in good shape. Slip below 1, and that’s your sneaky warning bell—you might struggle to pay bills. But wait—too high a ratio? That could mean you’re hoarding cash instead of putting it back to work growing your business. Balance is key!
Quick Ratio (The Acid-Test)
Let’s get a bit more selective—this ratio trims out inventory because, well, it’s not as quick to convert to cash for some businesses. Especially if you’re selling niche products that don’t fly off the shelves.
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