When company's debt-to-equity ratio is greater than 100% than its current ratio must be greater than 1.0 to 1.

Question

Quizplus · Accepted Answer

The two ratios are not directly related in this way. A company's debt-to-equity ratio compares its liabilities to its equity, while the current ratio compares its current assets to its current liabilities. A company's debt-to-equity ratio can be greater than 100% and still have a current ratio below 1.0 to 1.0 if it has more long-term debt than short-term assets.

When Company's Debt-To-Equity Ratio Is Greater Than 100% Than Its