The current ratio is equal to a firm’s current assets divided by its current liabilities. Use the information in Figure 8A.2 to calculate Twitter’s current ratio on December 31, 2016. Investors generally prefer that a firm’s current ratio be greater than 1.5. What problems might a firm encounter if the value of its current assets is low relative to the value of its current liabilities?

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Assets Liabilities and Stockholders' Equity $ 584 Current assets Current liabilities $4,747 Property and equipment 1,681 Long-term liabilities 784 Total liabilities 1,185 Goodwill 2,265 Other assets Stockholders' equity 154 4,605 Total assets Total liabilities and stockholders' $6,870 $6,870 equity