An abnormal decrease in the accounts payable turnover ratio or unexpected increases in the current ratio may provide indicators of overstated liabilities.

Question

Quizplus · Accepted Answer

An abnormal decrease in the accounts payable turnover ratio or unexpected increases in the current ratio may indicate understated liabilities, as both suggest the company is taking longer to pay off its suppliers or has more current assets relative to its liabilities, not that liabilities are overstated.

An Abnormal Decrease in the Accounts Payable Turnover Ratio or Unexpected