Multiple Choice Question

Last year, a firm had a current ratio of $1\mathrm{.}14.$ This year, the ratio is $0\mathrm{.}98.$ Assuming everything else equal, what do these values imply?

The firm paid off some of its short$-$term debt over the past year.

The firm has less current assets than it did one year ago.

The probability of the firm encountering financial distress is less now than it was a year ago.

The firm is less liquid this year than it was last year.