Which of the following combinations of ratios is preferable?

Question

Quizplus · Accepted Answer

A high current ratio indicates that a company has enough short-term assets to cover its short-term liabilities, which is a good sign of financial health. A low debt ratio indicates that a company has a low amount of debt compared to its equity, which means it has a lower risk of defaulting on its debt. Therefore, option B, where a company has a high current ratio and a low debt ratio, is preferable.

Which of the Following Combinations of Ratios Is Preferable