This topic was started on "Nigerian Diary" some days ago. We are here to look at the part 2 of that lesson. In case you missed the lesson 1, please move over to Nigerian Diary right now and read in details.
"2. Current ratio;
This can simply be seen as the ratio of the current assets to the current liabilties. This is always gotten from the balance sheet. The normal for this is at around 2:1 for most of our industries. But, if the ratio is higher,
eg. 7:1 it simply shows that the company is not making good use of their funds. That excess is supposed to be used for expansion of the business.
In case you see such, know that they are target for takeovers since the funds are not fully utilised.
What do you think will happen to your investment in such aspect?"
Source: Nigerian Diary
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