Which of the following statements regarding liquidity ratios is true ? (A) Higher the current ratio of a firm is, greater is its ability to pay off its current liabilities. (B) Current ratio is a crude ratio and it does
CS Executive · Financial and Strategic Management · PYQS · December 2022
Which of the following statements regarding liquidity ratios is true ? (A) Higher the current ratio of a firm is, greater is its ability to pay off its current liabilities. (B) Current ratio is a crude ratio and it does not take into account the differences amongst different categories of current assets. (C) To assess the quick liquidity position (liquidity ratio) of the firm, inventory is excluded from the calculation. (D) All the above are true
Answer & Explanation:
Correct Answer: Option (D)
Official answer key: (D).
Topics: Financial Management
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