Which of the following statements is true of a current ratio? A) ...

[jho37]

Which of the following statements is true of a current ratio?
 A) The larger a firm's current ratio, the harder it is for the firm to pay its short-term debts.
  B) The current ratio is a type of leverage ratio.
  C) A current ratio below 1.0 signifies a company's inability to pay its short-term liabilities with its current assets.
  D) The current ratio is computed by dividing a firm's current liabilities by its current assets.

Question 2

A banker or lender is more likely to make sizable loans to a sole proprietor than to a partnership.
 
 Indicate whether the statement is true or false

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Answer to Question 1

C

Answer to Question 2

False