πŸ“’ Too many exams? Don’t know which one suits you best? Book Your Free Expert πŸ‘‰ call Now!

  • google app store apple app store
  • βœ–

      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

      Relevant for Exams:

      ask-question