Question

If a firm has high current and quick ratios, this always is a good indication that a firm is managing its liquidity position well. True False

Answer 1

Answer:

True

Explanation:

Current and Quick ratio shows the liquidity position of the company. It shows that how much assets are available to company to pay off its liabilities if it becomes due in short period of time. High current and quick ratio make the company strong and it will have enough asset to deal with its obligation than with low current and quick ratio.