Which of the Following Statements About Liquidity Ratios Is True

question 40

Multiple Choice

Which of the following statements about liquidity ratios is true?

• A)The higher the current ratio, the more likely a firm is able to pay its short-term obligations
• B)The lower the quick ratio relative to the current ratio, the safer a firm is in terms of liquidity
• C)The ratio of net working capital to total assets always lies between 0 and 1
• D)Relatively high current ratios are usually a sign of efficient working capital management
• E)The lower the current ratio, the more likely a firm is able to pay its short-term obligations

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