The present value of the computer is certainly lower than the amount you bought it for a few months ago. An economist would say here that your computer has depreciated over the last few months. So, we can say that the fundamental concept of depreciation is to reflect the reduction in value of an asset…
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However, you have to know that a high value of the current ratio is not always good for investors. A disproportionately high current ratio may point out that the company uses its current assets inefficiently or doesn’t use the opportunities to gain capital from external short-term financing sources. If so, we could expect a considerable…
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