Which of the following statements is true regarding the current ratio?
A) A company with a high current ratio cannot have liquidity problems
B) A low current ratio suggests inefficient use of resources
C) The current ratio can be improved by paying creditors immediately prior to the preparation of financial statements
D) The current ratio presents a more conservative liquidity measure than does the quick ratio

Question

Quizplus · Accepted Answer

A current ratio can be manipulated by management and improved if creditors are paid immediately prior to the close of a financial statement period.

Which of the Following Statements Is True Regarding the Current