Which of the following would indicate a decrease in a company's short-term liquidity?
A)An increase in the current ratio
B)An increase in the quick ratio
C)A decrease in the operating cash flow to short-term debt ratio
D)A decrease in the accounts payable turnover ratio.

Question

Quizplus · Accepted Answer

A decrease in the operating cash flow to short-term debt ratio would indicate that the company is having difficulty generating enough cash to cover its short-term obligations, and therefore would be an indication of a decrease in short-term liquidity. The other options - an increase in current ratio, an increase in quick ratio, and a decrease in accounts payable turnover ratio - would all indicate an increase in short-term liquidity.

Which of the Following Would Indicate a Decrease in a Company's