Omega Supply's current ratio is 2 to 1. Its quick ratio is.75 to 1. Omega Supply has a good credit risk because the ratios reveal no liquidity problem.

Question

Quizplus · Accepted Answer

The current ratio of 2 to 1 indicates that Omega Supply has twice as many current assets as current liabilities, which can be a positive sign of liquidity. However, the quick ratio of .75 to 1 reveals that Omega Supply may not have enough quick assets (such as cash and accounts receivable) to cover its current liabilities, which could potentially lead to liquidity issues. Therefore, the statement that Omega Supply has no liquidity problems based on these ratios is false.

Omega Supply's Current Ratio Is 2 to 1