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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