A high current ratio suggests that the firm
A) has a small amount of long‑term debt
B) is carrying little inventory
C) is able to meet its current obligations
D) is profitable

Question

A high current ratio suggests that the firm​
A) ​has a small amount of long‑term debt
B) ​is carrying little inventory
C) ​is able to meet its current obligations
D) ​is profitable

Quizplus · Accepted Answer

A high current ratio indicates that the company has a significant amount of current assets (such as cash, accounts receivable, etc.) in relation to its current liabilities. This implies that the company is able to meet its short-term obligations (such as paying bills or debts) and is therefore financially stable in the short term. It does not necessarily indicate anything about the company's long-term debt or profitability.

A High Current Ratio Suggests That the Firm​

A High Current Ratio Suggests That the Firm