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    Question

    A significantly high current ratio (e.g., >3.0) in a

    company’s balance sheet might indicate:
    A Strong and efficient use of working capital Correct Answer Incorrect Answer
    B Potential underutilization of resources and poor asset management Correct Answer Incorrect Answer
    C Higher profitability margins Correct Answer Incorrect Answer
    D Adequate debt servicing capacity Correct Answer Incorrect Answer
    E Imminent risk of insolvency Correct Answer Incorrect Answer

    Solution

    Excess current assets relative to liabilities can indicate inefficient working capital utilization.

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