A company has the cash ratio of 2.3. What does this imply?
A)The company has an unnecessarily large amount of cash supply.
B)The company does not have enough cash supply.
C)The company is not in a position to pay off its long term liabilities.
D)The company is not in a position to pay off its current liabilities.

Question

Quizplus · Accepted Answer

A cash ratio of 2.3 means the company has 2.3 times more cash than its current liabilities, indicating an excessively large cash reserve relative to its short-term obligations.

A Company Has the Cash Ratio of 2