Which of the following does a low current ratio indicate about a business? The business will...

Which of the following does a low current ratio indicate about a business?

The business will have difficulty repaying debts.
The business will exceed its financial goals.
The business will accept low levels of risk.
The business will increase its spending power.

Expert Solution

Business low current ratio is mean when company face some problems and they failed generate revenue from its customer before the payment to its employees.

So according to this option 2 and 4 not fit in this because it indicate high current ratio. It indicate good position of bussiness and high current ratio.

So now we discuss on option 1 and 3.

In option 3 it is a type of challenging situation. That is in every business so it not indicate the low current ration.

In opition 1 we see will have difficulty repaying debts. it mean bussiness will face problem to repay its debt, thus it indicate low current ratio.

So option 1) The business will have difficulty repaying debts. is right answer.

Rahul Sunny answered 2 years ago

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