Which of the following statements is FALSE about the current ratio?
A)Instead of using the dollar amounts,the current ratio makes it easier to compare several companies.
B)The current ratio is used to evaluate a company's ability to pay current obligations.
C)Having more current assets than current liabilities will yield a current ratio less than 1.
D)A high current ratio suggests good liquidity.

Question

Quizplus · Accepted Answer

This statement is false. Having more current assets than current liabilities will yield a current ratio greater than 1, not less than 1. A current ratio less than 1 suggests that a company may have difficulty meeting its short-term obligations.

Which of the Following Statements Is FALSE About the Current