A current ratio of less than one is not so much of a concern when the company has a:
A)low fixed asset turnover ratio.
B)high days to collect number.
C)high inventory turnover ratio.
D)high debt-to-equity ratio.

Question

Quizplus · Accepted Answer

A high inventory turnover ratio indicates that inventory moves quickly,so less money is tied up in inventory,and therefore,excess cash can be used to reduce borrowing.This situation would result in a low current ratio.

A Current Ratio of Less Than One Is Not So