Final answer:
To improve a current ratio below 1, obtaining additional cash is directly effective because it increases current assets. Reducing expenses is not the recommended course of action as it does not directly improve the current ratio unless those expenses are connected to current liabilities.
Step-by-step explanation:
If a company has a current ratio below 1, it means that the company's current assets are less than its current liabilities. This situation indicates that the company may have difficulties meeting its short-term obligations. To improve this ratio, a company can pursue various strategies, but not all options are equally viable.
Reducing expenses is one approach that could potentially improve the current ratio by decreasing liabilities and potentially freeing up more cash as part of the current assets. However, obtaining additional cash is the more direct and effective method to improve the current ratio. By obtaining more cash, whether through loans, new equity, or other means, the company's current assets increase, which can improve the ratio swiftly and directly.
It is also important to note that reducing expenses, while beneficial in many contexts, does not directly impact the current ratio unless those expenses are tied to current liabilities, which is often not the case. Therefore, reducing expenses is not the recommended action when the goal is to improve the current ratio specifically.