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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

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.


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