The smaller the current ratio, the higher is the ability of a firm to repay its current debts.

Name: The smaller the current ratio, the higher is the ability of a firm to repay its current debts.
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Question

Quizplus · Accepted Answer

The current ratio is calculated by dividing current assets by current liabilities. A higher current ratio indicates that a company has a greater ability to repay its current debts. Therefore, the statement is false.

The Smaller the Current Ratio, the Higher Is the Ability