All other things equal,a higher current ratio indicates that ________.
A) a company has excess cash to pay liabilities
B) a short-term creditor is likely to be paid in full and on time
C) a company's long-term debt is coming due within the next year
D) a company's short-term debt is coming due within the next year

Question

Quizplus · Accepted Answer

A higher current ratio indicates that a company has a higher ability to pay its short-term liabilities, which means that a short-term creditor is more likely to be paid in full and on time. It does not necessarily mean that the company has excess cash, nor does it provide information about long-term or short-term debt coming due within the next year.

All Other Things Equal,a Higher Current Ratio Indicates That ________