All other things being equal, a higher current ratio indicates that _____.
A)the company has excess cash
B)a creditor is likely to be paid in full and on time
C)the company's long-term debt is due soon
D)a customer is likely to pay in full and on time

Question

Quizplus · Accepted Answer

A higher current ratio indicates that the company has more current assets relative to its current liabilities, making it more likely to be able to meet its short-term obligations. Therefore, creditors are more likely to be paid in full and on time. It does not necessarily indicate that the company has excess cash, that its long-term debt is due soon, or that customers are likely to pay in full and on time.

All Other Things Being Equal, a Higher Current Ratio Indicates