The current assets of Rock Garden Gifts were considered very liquid at December 31,Year 1.Which of the following does this indicate?

Question

Quizplus · Accepted Answer

If the current assets of the company are considered very liquid, it indicates that the company is able to pay its current obligations using those assets. This is a positive sign of the company's liquidity and financial health. Option A is incorrect because having a larger quick ratio than current ratio can have a different reason and does not reflect directly on the liquidity of current assets. Option B is incorrect because decreasing liquidity would not benefit the company and potential investors would want to see a healthy liquidity position. Option C is incorrect because borrowing money may not be necessary if the company already has sufficient current assets to cover its obligations.

The Current Assets of Rock Garden Gifts Were Considered Very