Given below are two statements: one is labelled as Assertion A and the other is labelled as Reason R. Assertion A: An excessively high current ratio can be interpreted as a negative indicator for a company's financial management. Reason R: A very high liquidity ratio often implies that the firm has idle assets and is under-utilizing its current resources to generate returns. In the light of the above statements, choose the most appropriate answer from the options given below:

Question

Accounting · Liquidity Ratios

Verified Solution4 OptionsUpdated: October 2026👁️1 View

Share:

Correct answer

Both A and R are correct and R is the correct explanation of A

Save this question and verified answer as a clean study sheet with live clickable link.

👥

Challenge your peer aspirants on WhatsApp or Telegram to solve this question!

Online Test Series

Practice full-length mock tests with real exam timers, instant score analysis, and all-India ranking.

Chapter Practice

Want more practice questions on Liquidity Ratios?

Solve complete topic-wise tests with detailed solutions on GkGet.

Recommended practice questions in Accounting · Liquidity Ratios

The 'Drain of Wealth' theory was propounded by which Indian nationalist leader?

Which event is considered the turning point in Mahatma Gandhi's leadership in the Indian independence movement?

Which African leader is known for his non-violent opposition to colonial rule?

Answer 1

Both A and R are correct but R is NOT the correct explanation of A

Answer 2

A is correct but R is not correct

Answer 3

Both A and R are correct and R is the correct explanation of A

Answer 4

A is not correct but R is correct

Related Practice Questions