Martin Inc. has a cash ratio of 0.3. This implies that the company ________.

Question

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A cash ratio of 0.3 indicates that Martin Inc. has only 30 cents of cash for every dollar of its current liabilities. This means that the company may not be able to meet its short-term debt obligations if they come due. As a result, potential investors and creditors may see Martin Inc. as a risky investment or lending opportunity. Therefore, the company is not sending a strong message to investors and creditors that it has the ability to repay its short-term debt.