alleryA firm reports a current ratio of 0.8. This tells a lender the firm should watch its short-term:
ARecruitment
BWarehousing
CObligations
DAdvertising
Answer & Solution
Correct answer: C. Obligations
1. A ratio above one leaves a buffer over the coming year's bills.
2. A ratio of 0.8 means current assets fall short of them.
3. The firm must watch its short-term obligations.
_Source: OpenStax Principles of Financial Accounting, Chapter 2, Introduction to Financial Statements._
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