A current ratio that is high according to an industry average might mean the company may have excessive inventory levels or slow moving inventory items.

Question

Quizplus · Accepted Answer

A high current ratio indicates that a company has more current assets than current liabilities, which can be positive. However, if the current ratio is significantly higher than the industry average, it may indicate that the company has excessive inventory levels or slow-moving inventory items that could potentially lead to liquidity issues in the future.

A Current Ratio That Is High According to an Industry