General Studies · Financial Analysis
A bank assesses a large corporate client using internal policy benchmarks: Current Ratio ≥ 2.0, Quick Ratio ≥ 1.2, and Interest Coverage Ratio ≥ 2.5. Financial Data Summary: - Current Assets: 2,000 (Inventory: 900, Debtors: 800, Cash: 50, Others: 250) - Gross Profit: 1,600 - Operating Expenses: 800 (including Depreciation of 200) - Interest Expenses: 300 - Total Current Liabilities: 1,000 Evaluate the company's financial health based on the bank's benchmarks.
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The company meets all three benchmarks successfully.
- 2The company fails to meet the Quick Ratio benchmark but meets the Current Ratio and Interest Coverage Ratio benchmarks.✓
- 3The company fails to meet both the Current Ratio and Quick Ratio benchmarks.
- 4The company meets the Quick Ratio benchmark but fails the Interest Coverage Ratio benchmark.
Correct answer
The company fails to meet the Quick Ratio benchmark but meets the Current Ratio and Interest Coverage Ratio benchmarks.
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