Final answer:
A current ratio of less than one indicates that a firm may have difficulty paying its short-term debt.
Step-by-step explanation:
A current ratio measures a firm's ability to pay its short-term debt obligations. It is calculated by dividing current assets by current liabilities. A current ratio of less than one indicates that a firm may not have enough current assets to cover its current liabilities, which means it may have difficulty paying off its short-term debts.
For example, if a company has a current ratio of 0.8, it means that it has $0.80 of current assets for every $1 of current liabilities. This suggests that the company may struggle to meet its short-term debt obligations.
Therefore, the statement is true. A current ratio of less than one indicates that a firm may have difficulty paying its short-term debt.