Financial Reporting and Analysis Q194
0. Which of the following is least likely correct about the interpretation of liquidity ratios?
- A
The quick ratio is more conservative than the current ratio and does not take inventory into account.
- B
The defensive interval ratio measures how long the company can continue to pay its expenses from its existing liquid assets.
- C
The longer the cash conversion cycle, the greater will be the liquidity of the company.
- Option : C
- Explanation : The longer the cash conversion cycle, the lower will be the liquidity of the company. Therefore, statement C is incorrect.
