Which of the following signifies that a company is unable to pay its current liabilities if they suddenly come due?
A) Current ratio is less than 1.
B) Current ratio is greater than 1.
C) Cash flow from operations is consistently higher than net income.
D) Sales, receivables, and inventory are not moving together.

Question

Quizplus · Accepted Answer

A current ratio less than 1 indicates that a company's current assets are insufficient to cover its current liabilities, suggesting potential liquidity issues if liabilities were to come due suddenly.

Which of the Following Signifies That a Company Is Unable