Which of the following indicates a lack of sufficient assets compared to liabilities?

The correct choice indicating a lack of sufficient assets compared to liabilities is related to the current ratio. The current ratio is a financial metric that evaluates an organization's ability to pay off its short-term liabilities with its short-term assets. A low current ratio suggests that current liabilities exceed current assets, reflecting potential liquidity issues and an inability to meet obligations as they come due.

When a company's current ratio is less than one, it signals that the business does not have enough readily available assets to cover its short-term liabilities, indicating a financial strain. This situation often causes concern among creditors and investors, as it can suggest that the business is struggling to maintain its operations.

In contrast, high working capital reflects a good financial position, as it indicates that a company has enough assets to cover its liabilities. Negative equity, which arises when liabilities surpass total assets, directly impacts long-term financial health rather than focusing solely on short-term obligations. Excessive liabilities indicate a high level of debt but do not automatically point to insufficient assets in a comparative context since a company can manage large liabilities effectively if supported by significant assets.