christianrockin christianrockin

10-06-2024
Business

Answered

A company has a cash ratio of 2.3. What does this imply?
OA. The company is not in a position to pay off its current liabilities.
OB. The company has an unnecessarily large amount of cash and cash equivalents.
OC. The company is not in a position to pay off its long-term liabilities.
◇ D. The company does not have enough cash supply.

Answer :

GinnyAnswer GinnyAnswer

10-06-2024

Final answer:

A cash ratio of 2.3 indicates the company has a strong ability to cover short-term obligations with liquid resources, showing financial stability.

Explanation:

The company does not have enough cash supply. A cash ratio of 2.3 implies that the company's liquid resources are more than twice its current liabilities, showing it has a strong ability to cover its short-term obligations with cash and cash equivalents.

This indicates that the company is highly liquid and in a good position to meet its current financial obligations without resorting to external financing, making it financially stable in the short term.

Learn more about Cash Ratio and Liquidity in Business here:

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