If a company has a current ratio greater than 1.0 to 1,repaying a short-termnote payable will increase the current ratio.

Question

Quizplus · Accepted Answer

If the current ratio is greater than 1.0 to 1, it means that the company has enough current assets to cover its current liabilities. Repaying a short-term note payable will reduce the current liabilities and increase the current assets, leading to an even greater current ratio. Therefore, the answer is true.

If a Company Has a Current Ratio Greater Than 1