Accounting · Ratio Analysis
The Apollo Trading Co. has maintained a current ratio of 0.8:1 for the last two reporting periods. The industry average is 1.2:1. In the board meeting, the CFO made the following statements: 1. 'Our short-term obligations exceed our short-term resources' 2. 'This ratio confirms that our operating cash flow for the period was negative' Which of the CFO's statements is/are necessarily correct based on the current ratio?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Neither 1 nor 2
- 2Both 1 and 2
- 32 only
- 41 only✓
Correct answer
1 only
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