A low current ratio indicates that a company has sufficient current assets to pay current liabilities as they become due.A high current ratio indicates that a company has sufficient current assets to pay current liabilities as they become due.

Question

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A low current ratio actually indicates that a company may have difficulty paying its current liabilities as they become due, while a high current ratio indicates that a company has a larger cushion of current assets to cover its current liabilities.

A Low Current Ratio Indicates That a Company Has Sufficient