A company whose current liabilities exceed its current assets may have a liquidity problem.

Question

Quizplus · Accepted Answer

Current liabilities are the debts that a company needs to pay within a year, while current assets are the assets that can be converted into cash within a year. If a company's current liabilities exceed its current assets, it may not have enough cash or assets to meet its short-term financial obligations, which can indicate a liquidity problem.

A Company Whose Current Liabilities Exceed Its Current Assets May