Which of the following combinations of ratios is preferable?

Question

Quizplus · Accepted Answer

A high current ratio indicates that the company has enough current assets to cover its current liabilities, which means it is financially stable in the short term. A low debt ratio indicates that the company has a low level of debt relative to its equity, which means it is financially stable in the long term. Thus, a high current ratio and a low debt ratio are preferable as they indicate both short-term and long-term financial stability.

Which of the Following Combinations of Ratios Is Preferable