Declining profitability and liquidity ratios are indications that a company may not survive.

Question

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A decline in profitability ratios (such as profit margin or return on assets) indicates that a company is generating less profit and may struggle to meet its financial obligations. Similarly, declining liquidity ratios (such as current ratio or quick ratio) suggest that a company may have difficulty meeting its short-term liabilities. Both of these factors can contribute to financial distress and increase the risk of a company being unable to survive.

Declining Profitability and Liquidity Ratios Are Indications That a Company