a low current ratio in business indicates that the business is
A. long term loan repayment problem B. efficient in the utilization of its resources C. unable to pay its bills on time D. growing its net assets effectively
Correct Answer: C
Explanation
A low current ratio indicates problems in working capital management. All other things being equal, creditors consider a high current ratio to be better than a low current ratio, because a high current ratio means that the company is more likely to meet its liabilities which are due over the next 12 months.
