RT Enterprises has a current ratio of less than one, and a very high debt-to-equity ratio.Which of the following will management of other companies most likely be reluctant to do?
I.Sign an agreement with RT Enterprises to become a major supplier
II.Sell RT Enterprises goods on credit
III.Expand capacity to better serve the needs of RT Enterprises
A)I and II
B)II and III
C)I and III
D)I, II, and III

Question

Quizplus · Accepted Answer

A current ratio of less than one indicates that RT Enterprises may have difficulty meeting short-term obligations, and a very high debt-to-equity ratio suggests potential long-term financial instability. Therefore, other companies might be reluctant to engage in activities (I, II, and III) that increase their financial exposure to RT Enterprises.

RT Enterprises Has a Current Ratio of Less Than One