📢 Too many exams? Don’t know which one suits you best? Book Your Free Expert 👉 call Now!


    ⚡ Month End Offer - Flat 52% Off On All Courses! Enroll Now ⚡
    00:00:00 AM Left

    Question

    A company's current ratio is 2.5, but its quick ratio is

    only 0.9. What does this suggest about its liquidity?
    A Adequate cash reserves Correct Answer Incorrect Answer
    B Excessive receivables Correct Answer Incorrect Answer
    C High inventory holding Correct Answer Incorrect Answer
    D Insolvency risk Correct Answer Incorrect Answer

    Solution

    The significant gap between current and quick ratio indicates heavy reliance on inventory, which is less liquid.

    Practice Next
    ask-question