What does a higher Current Ratio indicate about a company?

A higher Current Ratio indicates that a company is in a stronger position to cover its short-term liabilities with its short-term assets. This is important because it reflects the company's liquidity and ability to meet its obligations as they come due. When the Current Ratio is above 1, it suggests that a company has more current assets than current liabilities, which typically signifies a lower risk of default. Investors and creditors often view this positively, as it implies financial stability and the ability to navigate potential cash flow challenges.

The other options do not align with the implications of a higher Current Ratio. While a company’s market reputation, profitability, or dependence on debt might be influenced by its financial metrics, they are not directly indicated by the Current Ratio itself. Therefore, focusing on liquidity and the capability to manage short-term obligations clearly supports the conclusion that a higher Current Ratio indicates a lower risk of default.