<Ol> <Li> The ratio is only useful when two companies are compared within industry because inter industry business operations differ substantially . </Li> <Li> To determine liquidity, the current ratio is not as helpful as the quick ratio, because it includes all those assets that may not be easily liquidated, like prepaid expenses and inventory . </Li> </Ol> <Li> The ratio is only useful when two companies are compared within industry because inter industry business operations differ substantially . </Li> <Li> To determine liquidity, the current ratio is not as helpful as the quick ratio, because it includes all those assets that may not be easily liquidated, like prepaid expenses and inventory . </Li>

Current ratio and quick ratio less than 1