1. Is it possible for a company to miss payment of its maturing obligations in spite of having high current ratio and quick assets ratio? Explain.
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ashleyjean2111
It’s unlikely for a company to miss short-term debt and accounts payable, when they have a high current ratio. Because that ratio compares the current assets to the current liabilities, and through conventional accounts of debt, there will be a discount when paying earlier than the deadline. And then there will be penalties with paying past the deadline, wherein after a certain point some debt may be written off or sent to collection agencies if the company in debt is really bad on paying back. To keep good credit standing, it is implied one will manage the current liabilities needed to finance the operations and inventory needs of that company. While missing some may happen, it is not a policy in the company that will last long in operations, because companies are looking for good contracts and exchange of goods and services. And companies with lower credit ratings will be qualified in that way when some companies can decide whether or not to do business in some large deal or transaction with them. 1.2K views
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