Q. Which of the following statements about liquidity ratios is true? (Solved)

1. the higher the current ratio, the more likely a firm is able to pay its short-term obligations.

2. the lower the quick ratios relative to the current ratio, the safer a firm is in terms of liquidity.

3. the ratio of net working capital to total assets always lies between 0 and 1.

4. relatively high current ratios are usually a sign of efficient working capital management.