Liquidity Impacts. A company's current and quick ratios have moved as follows: section*{Required:} Comment on the validity

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Liquidity Impacts. A company's current and quick ratios have moved as follows:

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\section*{Required:}
Comment on the validity of the following statements:

(a) The stronger current ratio in 1999 reflects improved profitability.

(b) A large obsolete inventory may be a serious problem.

(c) The quick ratio change reflects a desire to pay bills on time.

(d) The current ratio in 1999 is clearly too high.

(e) The company is more liquid in 1999 than in 1996.

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Managerial Accounting

ISBN: 9780538842822

9th Edition

Authors: Harold M. Sollenberger, Arnold Schneider, Lane K. Anderson

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Question Posted: Jun 04, 2024 02:22 AM

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Liquidity Impacts. A company's current and quick ratios have moved as follows: section*{Required:} Comment on the validity

Question:

1996 1997 1998 1999 Current ratio. 2.0:1 2.5:1 3.0:1 4.0:1 Quick ratio 1.5:1 1.0:1 0.8:1 0.6:1

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Managerial Accounting

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