In 2013, C Co reported a trade payables turnover ratio of 1.85 and a current ratio of 0.66. Their statement of financial position shows $2.1 billion in marketable securities not included in their current assets and cash flow from operations. Which of the following interpretations is most likely?
A) Since both these ratios are low, it might indicate poor liquidity and inability to pay vendors in a timely manner.
B) C Co practices aggressive cash management policies including investing excess cash and using vendors to finance operations by making slow payment to them.
C) C Co must be carrying a low amount of current liabilities in comparison to its total liabilities.
D) Since the two ratios are fairly high, it indicates C Co has little difficulty paying its bills in a timely manner.
Correct Answer:
Verified
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