A current ratio of less than one is not so much of a concern when the company has a:
A)low fixed asset turnover ratio.
B)high days to collect number.
C)high inventory turnover ratio.
D)all of the above.

Question

Quizplus · Accepted Answer

A high inventory turnover ratio implies that the company is efficiently selling its inventory and generating cash flow, which can help to offset a current ratio of less than one. In contrast, a low fixed asset turnover ratio or a high days to collect number could exacerbate liquidity concerns.

A Current Ratio of Less Than One Is Not So