The greater the current ratio is above one, the greater its ability to meet short-term obligations.

Question

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The current ratio is a liquidity ratio that measures a company's ability to meet its short-term obligations. A current ratio of one means that a company's current assets are just enough to cover its current liabilities. The greater the current ratio is above one, the more easily a company can meet its short-term obligations. Therefore, a higher current ratio is generally considered to indicate better short-term liquidity.

The Greater the Current Ratio Is Above One, the Greater