Question on: WAEC Accounting - 2013
a low current ratio in business indicates that the business is
A
long term loan repayment problem
B
efficient in the utilization of its resources
C
unable to pay its bills on time
D
growing its net assets effectively
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Correct Option: C
A low current ratio indicates problems in working capital management. All other things being equal, creditors consider a high current ratio to be better than a low current ratio, because a high current ratio means that the company is more likely to meet its liabilities which are due over the next 12 months.
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