Which High Current Ratio represents Poor Financial Management and Find Out the Correct statement in Ratio Analysis
1. A high current ratio may indicate what aspect of poor financial management?
a. the firm will have difficulty meeting short-term obligations h. the firm lacks liquidity
b. the firm should borrow more
c. the firm may be carrying too much cash thereby foregoing more profitable opportunities
d. none of the above
2. Which one of the following statements is correct concerning ratio analysis?
a. Ratios are .best used to indicate that further analysis may be required rather than an independent determinant of financial health.
b. Ratios do not address the problem of size differences among firms.
c. Only a very limited number of ratios can be used for analytical purposes.
d. Each ratio has a specific formula that is used consistently by all analysts.
e. Ratios cannot be used for comparison purposes over periods of time.
These multiple choice questions belong to Finance. The first question is about aspects of poor financial management with high current ratio and amortization and the second question is about ratio analysis.