If the only information you are given about Ryan Corporation, a large public company in business for many years, is that it has a current ratio of 2.9, what could you infer from this?
A) It can meet the short-term obligations without any difficulty.
B) You could determine that Ryan has a liquidity problem because Ryan's current ratio is greater than 2 which is the rule of thumb for the current ratio.
C) Nothing, you would also need the current ratio's from the last few years of the S&P 500 Index.
D) You could determine that Ryan has an activity problem because Ryan's current ratio is greater than 2 which is the rule of thumb for the current ratio.

Question

Quizplus · Accepted Answer

A current ratio of 2.9 indicates that Ryan Corporation has more than enough current assets to meet its current liabilities, meaning it can cover its short-term obligations without difficulty. This suggests a good level of liquidity and financial stability.

If the Only Information You Are Given About Ryan Corporation