You are considering buying a bond from a company that has a quick ratio of 0.45.This means that:
A)the company has 45% of its total assets in the current category.
B)the company does not have the ability to pay off all the debt it owes with all the assets it owns.
C)the company does not have the ability to pay off all the debt that is due in the near future with assets that are available in the near future.
D)stockholders currently own 45% of the company's assets.

Question

Quizplus · Accepted Answer

A quick ratio of 0.45 means that for every dollar of debt that is due in the near future, the company has only $0.45 of assets that can quickly be converted to cash to pay off the debt. This indicates that the company may have difficulty meeting its short-term obligations, which can be a cause for concern for potential bondholders.

You Are Considering Buying a Bond from a Company That