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A firm has a current ratio of 0.9. Given this you know for certain that the...

A firm has a current ratio of 0.9. Given this you know for certain that the firm: A. Has negative net working capital B. Has more cash than inventory C. Has more current liabilities than it does current assets D. Has positive net working capital E. Pays cash for its inventory

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Answer #1

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Current ratio = 0.9

Current assets / Current liabilities = 0.9

Current assets = 0.9 * Current liabilities

The above equation shows , current assets are 0.9 of current liabilities , It does mean current liabilities are more than current assets.

Option (C) Has more current liabilities than it does current assets.

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