Liquidity problems exist for a company when its quick ratio
A) Is less than the industry average
B) Is 1 to 1
C) Is higher than 1 to 1
D) Is lower than 1 to 1
E) Is less than the industry average and is lower than 1 to 1

Question

Quizplus · Accepted Answer

A quick ratio lower than 1 to 1 indicates that the company may have difficulty meeting its short-term financial obligations with its current assets. This means the company's liquidity is limited, which can lead to liquidity problems.

Liquidity Problems Exist for a Company When Its Quick Ratio