Which of the following is NOT true of liquidity ratios?
A) They measure the ability of a firm to meet short-term obligations with short-term assets without putting the firm in financial trouble.
B) There are two commonly used ratios to measure liquidity-current ratio and quick ratio.
C) For manufacturing firms, quick ratios will tend to be much larger than current ratios.
D) The higher the liquidity ratios, the more liquid the firm and the better its ability to pay its short-term bills.

Question

Quizplus · Accepted Answer

For manufacturing firms, quick ratios will tend to be much smaller than current ratios due to the high inventory value in their assets.

Which of the Following Is NOT True of Liquidity Ratios