Can you confirm if the answer is accurate to the situation? Question: As a result of the COVID-19 crisis, Company 1 will sell its receivables and increase cash holdings at a discount. What will happen to the company's liquidity ratios (cash ratio, quick ratio, current ratio)?

Answer: The company's current ratio and quick ratio would remain the same but the cash ratio would increase. The cash ratio will see an influx of cash from the sale of all of Company A's receivables. Since the cash ratio formula is cash + cash equivalents / current liabilities, the increase in cash would affect the formula and increase the cash ratio.