A company's current ratio is 1.2 and its quick ratio is 0.25. This company is probably an excellent credit risk because the ratios reveal no indication of liquidity problems.

Question

Quizplus · Accepted Answer

The current ratio and quick ratio suggest that the company may have liquidity problems. A current ratio of less than 2 and a quick ratio of less than 1 indicate potential short-term liquidity issues. Therefore, the statement is false.

A Company's Current Ratio Is 1