Final answer:
A current ratio above 1 is suggested by financial advisors, which indicates that a company can comfortably meet its short-term liabilities with its current assets. An increasing trend is also seen as favorable, signaling improving financial health. However, appropriate ratios can vary by industry.
Step-by-step explanation:
Financial advisors often suggest that a good current ratio is above 1, with a recommendation for an increasing trend over time. The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year. It is calculated by dividing current assets by current liabilities. Having a current ratio above 1 indicates that the company has more current assets than current liabilities, implying it should be able to meet its short-term obligations without needing to sell long-term assets or raising additional capital.
A trend for the ratio to be increasing is also a positive sign, indicating improving financial health and potentially less risk for investors or creditors. Nonetheless, it's prudent to remember that the appropriate current ratio may vary by industry and should always be analyzed in context with other financial metrics and industry standards.