If a Company Has a Current Ratio of 0

question 45

Multiple Choice

If a company has a current ratio of 0.82, which of the following statements would be true?

• A)The company is a serious credit risk and should not be lent money.
• B)The company's current ratio is below the industry average.
• C)The company's working capital cannot be calculated.
• D)The company's working capital is negative.

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Definitions:

Total Costs

The complete sum of all expenses incurred by a business in producing goods or services, including fixed and variable costs.

Output

The total amount of goods or services produced by a company, individual, or process within a given time frame.

MC

MC, or Marginal Costs, refers to the cost associated with producing an additional unit of a good or service, highlighting the incremental expense of production expansion.

AC

Typically refers to Air Conditioning, a system used for cooling and sometimes heating depending on the air properties needed.