A firm's current ratio is above the industry average;however,the firm's quick ratio is below the industry average.These ratios suggest that the firm ________.
A) has relatively more total current assets and even more inventory than other firms in the industry
B) is very efficient at managing inventories
C) has liquidity that is superior to the average firm in the industry
D) is near technical insolvency
E) none of these

Question

Quizplus · Accepted Answer

The current ratio being above average indicates more current assets, but the quick ratio being below average suggests a high proportion of inventory, which is not as liquid.

A Firm's Current Ratio Is Above the Industry Average;however,the Firm's