the current ratio (CR) measures the corporations ability to cover its short-term (ST) maturing liabilities with current assets (CA).

1. Is it better to have a higher CR to the industry average or is it better to have a lower CR? Explain your answer
2. When inventories increase, what effect will this have on the CR, potential profitability, and risk to the firm as a result? Explain.
3. When accounts payable (AP) drop, what effect will this have on the CR, potential profitability, and risk to the firm as a result? Explain.