A low debt ratio is preferable to a high debt ratio, whereas a high current ratio is preferable to a low current ratio.

Question

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A low debt ratio indicates that the company is not overly reliant on borrowing money, which is generally considered to be less risky. A high current ratio indicates that the company has enough current assets (such as cash, inventory, and accounts receivable) to cover its current liabilities (such as bills and debt payments), which is a sign of financial stability.

A Low Debt Ratio Is Preferable to a High Debt