Concept:The current ratio checks whether a business can meet its short-term obligations using its current assets.
Explanation:The current ratio is calculated as
Current LiabilitiesCurrent Assets.
A low current ratio means current assets are low when compared with current liabilities due within one year.
This indicates that the business may not have enough liquid resources to pay its bills when they fall due.
It reflects a short-term liquidity problem, not a long-term loan repayment problem.
Therefore, a low current ratio is a warning sign of poor working capital management and weak liquidity.
It does not show efficient resource use or effective net asset growth.
Answer:C. unable to pay its bills on time