A firm's current ratio changed from 1.4 times in the previous year to 1.6 times year. Concluding that the firm's liquidity improved is ___________.

Name: A firm's current ratio changed from 1.4 times in the previous year to 1.6 times year. Concluding that the firm's liquidity improved is ___________.
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Question

Quizplus · Accepted Answer

An increase in the current ratio indicates that the firm has more current assets to cover its current liabilities, which means an improvement in liquidity. Therefore, the statement is true.

A Firm's Current Ratio Changed from 1