A current ratio greater than 1 can tell us that the company ________.
A)should be able to cover the current liabilities
B)should be able to keep away from short-term cash problems
C)may have too much capital tied up in current assets
D)All of these

Question

Quizplus · Accepted Answer

A current ratio greater than 1 means that the company has more current assets than current liabilities, indicating that it should be able to cover its current liabilities and keep away from short-term cash problems. However, it may also suggest that the company has too much capital tied up in current assets, which could potentially limit its long-term growth and profitability. Therefore, all of these statements are true.

A Current Ratio Greater Than 1 Can Tell Us That