Can a company have a high liquidity ratio and still face financial trouble?

Yes, a high liquidity ratio alone does not guarantee a company’s financial well-being. While a high liquidity ratio indicates a strong ability to meet short-term obligations, it could also indicate that the company is holding excess cash that could be invested elsewhere. Other financial metrics, such as profitability and solvency ratios, should be considered to comprehensively assess the company’s overall financial health.