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3. An analyst is comparing liquidity ratios for the following two companies. The analyst concludes that company 1 has higher liquidity than company 2 because

3. An analyst is comparing liquidity ratios for the following two companies. The analyst concludes that company 1 has higher liquidity than company 2 because company 1 has a higher current ratio and because company 2 has very little cash on the balance sheet. Company 1 Cash 70 Payables 240 Inventory 250 Short term debt 150 Receivables 140 Company 2 Cash 20 Payables 240 Inventory 120 Short term debt 150 Receivables 250

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