Use the table for the question(s)below.
-If the above balance sheet is for a retail company, what indications about this company would best be drawn from the changes in quick ratio between 2017 and 2018?
A)The company has reduced the risk that it will experience a cash shortfall in the near future.
B)The risk that the company will experience a cash shortfall in the near future is unchanged.
C)The company has increased the risk that it will experience a cash shortfall in the near future.
D)The company has eliminated the risk that it will experience a cash shortfall in the near future.

Question

Use the table for the question(s)below. 
-If the above balance sheet is for a retail company, what indications about this company would best be drawn from the changes in quick ratio between 2017 and 2018?
A)The company has reduced the risk that it will experience a cash shortfall in the near future. 
B)The risk that the company will experience a cash shortfall in the near future is unchanged. 
C)The company has increased the risk that it will experience a cash shortfall in the near future. 
D)The company has eliminated the risk that it will experience a cash shortfall in the near future.

Quizplus · Accepted Answer

The quick ratio has decreased from 1.5 in 2017 to 1.2 in 2018, indicating that the company has a lower ability to meet short-term obligations with its liquid assets. This suggests an increased risk that the company will experience a cash shortfall in the near future.

Use the Table for the Question(s)below