Assuming that the level of total assets remains unchanged, the effect of a decrease in the ratio of current assets to total assets is an increase in a firm's risk of insolvency.

Question

Quizplus · Accepted Answer

A decrease in the ratio of current assets to total assets means the firm has less liquidity and may struggle to meet its short-term obligations, increasing the risk of insolvency.

Assuming That the Level of Total Assets Remains Unchanged, the Effect