a very high current ratio will
a)increase profitability
b)decrease profitability
c)not affect profitability
d)none of the above
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Answer:
increase profitability
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(a).A very high current will "Increase profitability.
Step-by-step explanation:
- Liquidity ratios assess a company capacity to meet its short-term obligation which current assets of Increase profitability. the current ratio and the quick ratio are two of the most frequent liquidity ratios.
- A larger liquidity ratio suggest that a company is better positioned to satisfy its obligation, but it can also signal that the corporation isn't making optimum use of its assets.
- paying down liabilities, utilizing long-term financing , and managing receivables and payable properly are all ways for a corporation to improve its liquidity ratios.
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