Question

The cash ratios of four companies are listed below. Company Cash Ratio Juan Corp. 0.23 ​Rose, Inc. 0.14 ​Freelance, Inc. 0.20 Pioneer Corp. 0.28 Which company has the maximum ability to repay its current​ liabilities?

Answer 1

Answer: Pioneer Corp

Step-by-step explanation:

The Cash Ratio is a measure of a Company's ability to pay off it s Current Liabilities with it's most liquid assets.

It is calculated by Dividing the Company's Cash and Cash Equivalents by it's Current Liabilities.

The higher the figure, the more capable of paying off their Current Liabilities with Cash the company are.

While it seems that all else being equal, they can all pay off their Current Liabilities, Pioneer Corp. has a Cash Ratio of 0.28 which is the highest listed there. This means that they have the MAXIMUM ability to pay off their Current Liabilities ably.

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