The liquidity index should be a number that is either greater than one or less than zero.

Question

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The liquidity index is a measure of how easily a company can pay off its short-term liabilities. It is calculated by dividing the company's current assets by its current liabilities. The resulting number is a ratio and should be greater than one. If the ratio is less than one, it indicates that the company may have difficulty paying off its short-term debts. If the ratio is greater than one, it indicates that the company has more current assets than current liabilities and is in a better position to pay off its debts. Therefore, the liquidity index should not be less than zero.

The Liquidity Index Should Be a Number That Is Either