In general, the greater a firm's current assets relative to its short-term obligations, the better able it will be to pay its bills as they come due.

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This statement is true. If a firm has a higher ratio of current assets to short-term obligations, it indicates that it has sufficient funds to pay its bills as they come due. Current assets include cash, accounts receivable, inventory, and other assets that can be easily converted into cash within a year, while short-term obligations include accounts payable, short-term loans, and other liabilities that are due within a year. A higher ratio of current assets to short-term obligations means that the firm has a better liquidity position and can meet its short-term financial obligations comfortably.

In General, the Greater a Firm's Current Assets Relative to Its