A company with a high current ratio should never have liquidity problems.

Question

Quizplus · Accepted Answer

A high current ratio indicates a company has enough current assets to cover its current liabilities. However, it does not necessarily mean the company will not have liquidity problems. The company may still face cash flow issues if a significant portion of its current assets are tied up in inventory, for example, or if it has large unpaid bills to cover. Other factors such as market conditions, mismanagement, or unexpected expenses can also impact a company's liquidity.

A Company with a High Current Ratio Should Never Have