Although, the Red Cross 2014 current ratio is below the industry benchmark, the organization is still able to meet its short-term liabilities since the ratio is greater than 1 (CFI, 2021).
I tend to think that a ratio below one is not good as the organization can fail to meets its immediate needs. But, what will a higher ratio communicate about an organization?
For example, if in your calculation of the Red Cross ratio you got a figure say 9. Will that indicate that the organization is holding more of its resources in cash? And therefore, not good to invest with as it will not put the money into useful activities that can result to profit.
I tend to think that a ratio below one is not good as the organization can fail to meets its immediate needs. But, what will a higher ratio communicate about an organization?
For example, if in your calculation of the Red Cross ratio you got a figure say 9. Will that indicate that the organization is holding more of its resources in cash? And therefore, not good to invest with as it will not put the money into useful activities that can result to profit.
