Which of the following statements is incorrect?
A)The quicker a company collects money from its customers the greater its liquidity, all else equal.
B)The more quickly a company turns over its inventory, the greater its liquidity, all else equal.
C)The lower a company's depreciation the greater its liquidity, all else equal.
D)The greater a company's profit margin the greater its liquidity, all else equal.

Question

Quizplus · Accepted Answer

Depreciation is a non-cash expense and does not directly affect a company's liquidity. Liquidity is more directly influenced by factors that affect cash flow, such as the speed of collecting receivables, inventory turnover, and profit margins.

Which of the Following Statements Is Incorrect