Explain what it means for a firm to have a current ratio equal to 0.50
QUESTION
Explain what it means for a firm to have a current ratio equal to 0.50. Would the firm be better off if the current ratio were 1.50? What if it were 15.0? Explain your answers.
If firm have current ratio is .50 that means our current liability is double of our current assets. that is not situation for the firm. Because firm dont have liquidity to pay its current liability. If the current ratio is 1.5 then firm would be in better situation than .50. Because in that¦
ion current assets of the firm is 1.5 time of the current liability and company can pay off its current liability. But the ideal situation of current of current ratio it should be 2 or more than two.
ANSWER:
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