Which of the following statements regarding liquidity ratios is true?
A) A low current ratio generally indicates the ability to pay current liabilities on a timely basis.
B) A low acid-test ratio generally indicates the ability to pay current liabilities on a timely basis.
C) All current assets are due within one year and therefore have essentially equal liquidity.
D) A high working capital generally indicates the ability to pay current liabilities on a timely basis.
Answer: D
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