Analyze the liquidity of firms


Response to the following problem:

Suppose you are comparing two firms that are in the same line of business. Firm C has an operating cycle of 40 days, and D has an operating cycle of 60 days. Firm C has a current ratio of 3, and D has a current ratio of 2.5. Comment on the liquidity of the two firms. Which firm has more risk of not satisfying its near-term obligations? Why?

Solution Preview :

Prepared by a verified Expert
Financial Accounting: Analyze the liquidity of firms
Reference No:- TGS02107777

Now Priced at $20 (50% Discount)

Recommended (95%)

Rated (4.7/5)