Question: Why might a company have a high current ratio but a low quick ratio (acid test ratio)?

Why might a company have a high current ratio but a low quick ratio (acid test ratio)?

Step by Step Solution

★★★★★

3.50 Rating (160 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

A company having a high current ratio may have so m... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Document Format (1 attachment)

Word file Icon

498-B-F-E (779).docx

120 KBs Word File

Students Have Also Explored These Related Finance Questions!

Q:

Why might a company understate expenses? Why might a company overstate expenses? How might a company accomplish these inaccuracies? For the auditor, how does professional skepticism play a role in...

Q:

Why might a company offer stock options to an employee instead of simply paying the employee cash? Why might the employee accept stock options instead of asking to be paid in cash?

Q:

Why might a company have a legal duty to retain records? Give an example.

Q:

d. It is all puidul pilul 1 UI Juu ong o 9. Why might a company have a high current ratio but a low quick ratio (acid test ratio)? a. Ineffective accounts receivable practices b. Cash burn...

Q:

29. Why might a company have a high current ratio but a low quck ratio (acid test ratio)? a. Ineffective accounts receivable practices b. Cash burn e. Over-investment in inventory d. Ineffective...

Q:

Compared with industry, a company has a high current ratio and a low quick ratio. What is the most likely cause? What other ratios could be examined to support the finding?

Q:

Which one of the below is a source of cash inflow? a.Payroll b.Loan payments c.Investments d.Taxes Why can inventory drain company's cash? a.It ties cash at a zero rate of return. b.It requires...

Q:

Based on the results of the previous exercise, what conclusions can you draw about the strengths and weaknesses between Jetblue and Southwest? Please justify your arguments. 1) Calculate the...

Q:

5 ) Why might a company have a high current ratio but a low quick ratio ( acid test ratio ) ?

Q:

Using MS Excel, calculate financial ratios for DSS for each of the years for which accounts are available. Based on the ratios calculated, identify (and explain) clearly DSSs strengths and...

Q:

You are supplied with a 4.12 % concentration (by weight) hydrogen peroxide solution. Assume the density of your solution is 1.00 g/mL. a. Write a balanced equation for the reaction of aqueous...

Q:

What are the auditor's responsibilities in relation to fraud?

Q:

5.23 Refer to Problem 5.22. What is the probability that for every five children who participated in the survey exactly five children dislike eating vegetables?

Q:

Boiling Pot Ltd commences operations on 1 July 2018. One year after the commencement of its operations (30 June 2019) the entity prepares the following information, showing both the carrying amounts...

Q:

What is meant by a cash budget? Describe how a cash budget is prepared.

Q:

The PDC Company was described earlier in this chapter. Refer to the PDC Companys projected monthly operating schedules in Table. PDCs sales are projected to be $80,000 in September 2011. A. Prepare...

Q:

Why is it usually easier to forecast sales for seasoned firms in contrast with early-stage ventures?

Q:

The market value balance sheet for Tidwell Manufacturing is shown here. The company has declared a 10 percent stock dividend. The stock goes ex dividend tomorrow (the chronology for a stock dividend...

Q:

Your division is considering two projects with the following cash flows (in millions): 0 1 2 3 Project A -$27 $13 $17 $8 Project B -$25 $14 $11 $2 What are the projects' NPVs assuming the WACC is 5%?...

Q:

Timestamp FMG.AX 2022/4/14 $ 21.61 2022/4/13 $ 21.34 2022/4/12 $ 21.17 2022/4/11 $ 21.19 2022/4/8 $ 21.83 2022/4/7 $ 21.75 2022/4/6 $ 21.66 2022/4/5 $ 21.72 2022/4/4 $ 21.70 2022/4/1 $ 21.06...