Problem 1: If a firm's current ratio is less than 1.0, it indicates that:
a. The firm had negative net income for the year
b. The firm will be unable to pay its shortterm loans which come due this year
c. Current Assets are less than Current Liabilities
d. The firm is insolvent
Problem 2: A firm which has a relatively large amount of cash and receivables in its current assets accounts and a relatively small amount of current liabilities would be considered:
a. liquid
b. profitable
c. risky
d. nuts