Historically current ratios were 2:1. However, liquidity ratios have been falling over the past decade. In fact, Dell Corporation is quite unique in that it can operate with a current ratio near 1:1 or even negative. Examine the corporation’s web site, annual report and 10-K. Pay particular attention to the company’s balance sheet.
Discuss how Dell can operate with such a historically low current ratio, why it does so and what safeguards you would have as a financial manager to prevent this from becoming a crisis.
Comment on:
How does Dell operate with such a low current ratio?
Why does Dell operate with such a low current ratio?
What safeguards would a financial manager have to prevent a crisis?