A firm with a very low current ratio in comparison to the industry standard could lower the risk of unavailable short-term funds by moving toward ________ financing strategy.
A) the aggressive
B) the conservative
C) a permanent
D) a seasonal

Question

Quizplus · Accepted Answer

A firm with a low current ratio is at risk of not being able to meet its short-term obligations. Moving toward a conservative financing strategy that prioritizes long-term financing sources such as equity and long-term debt can lower this risk by ensuring more stable funds. Choosing an aggressive financing strategy such as relying heavily on short-term debt could exacerbate the issue. A permanent financing strategy is not a commonly used term in finance, and a seasonal financing strategy may not provide enough stability in the long term.

A Firm with a Very Low Current Ratio in Comparison