Analyse the statements given below and choose the correct option: Statement 1: A high current ratio always indicates strong liquidity. Statement 2: A very high inventory holding period may distort the current ratio.

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Accounting · Ratio Analysis

Analyse the statements given below and choose the correct option: Statement 1: A high current ratio always indicates strong liquidity. Statement 2: A very high inventory holding period may distort the current ratio.

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Correct answer

Only Statement 2 is correct

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Answer 1

Both Statement 1 and Statement 2 are incorrect

Answer 2

Both Statement 1 and Statement 2 are correct

Answer 3

Only Statement 2 is correct

Answer 4

Only Statement 1 is correct

Analyse the statements given below and choose the correct option: Statement 1: A high current ratio always indicates strong liquidity. Statement 2: A very high inventory holding period may distort the current ratio.

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Analyse the statements given below and choose the correct option: Statement 1: A high current ratio always indicates strong liquidity. Statement 2: A very high inventory holding period may distort the current ratio.

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