An example of a guideline (or rule of thumb)for comparison is the 2:1 level for the current ratio and 1:1 level for the acid-test ratio.

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The 2:1 level for the current ratio and 1:1 level for the acid-test ratio are commonly used guidelines or rules of thumb for financial analysis. The current ratio compares a company's current assets to its current liabilities, while the acid-test ratio only includes the most liquid current assets (such as cash and accounts receivable) in its calculation. Both ratios are used to assess a company's ability to meet its short-term financial obligations.

An Example of a Guideline (Or Rule of Thumb)for Comparison