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A Low Current Ratio Indicates That a Company Has Sufficient

question 111

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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.

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Definitions:

Payback Period

An alternative metric to calculate the duration required for an investment to recoup its initial costs, measuring the risk and efficiency of the investment.

Initial Cost

The initial expenditure required to acquire an asset or to start a project, including purchase price and any associated set-up fees.

Investment

Allocation of resources, usually money, in order to generate income or profit.

Cash Flows

The total amount of money being transferred into and out of a business, especially regarding liquidity.

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