Which Statement Concerning the Current (Working Capital) Ratio Is Incorrect

question 10

Multiple Choice

Which statement concerning the current (working capital) ratio is incorrect?

• A) A low current ratio may indicate difficulty in meeting short-term commitments.
• B) The current ratio can be manipulated at balance date,
• C) A high current ratio may indicate excessive investment in working capital.
• D) A current ratio of $1.50 of current assets for each $1 of current liabilities should always be maintained.
• E)g. by using cash to pay off short-term debt.

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