It is more favourable to have a liquidity ratio of less then 1.

Name: It is more favourable to have a liquidity ratio of less then 1.
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Question

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A liquidity ratio of less than 1 implies that the current liabilities of a company are greater than its current assets, which indicates a higher risk of being unable to pay off short-term debts. A liquidity ratio of more than 1 implies that a company has sufficient current assets to cover its current liabilities, which is considered favorable.

It Is More Favourable to Have a Liquidity Ratio of Less