Which of the following is most likely a sign that a company has solvency or liquidity problems?
A) A current ratio is low compared to other companies in the industry.
B) An interest coverage ratio is high compared to other companies in the industry.
C) A ratio of debt to equity that low compared to other companies in the industry.
D) A capital structure leverage ratio is low compared to other companies in the industry.

Question

Quizplus · Accepted Answer

A current ratio that is low compared to other companies in the same industry may indicate that a company is having difficulty meeting its short-term debt obligations and may have liquidity problems. B, C, and D do not necessarily indicate solvency or liquidity problems.

Which of the Following Is Most Likely a Sign That