Judging only from the ratios below,which of the following clothing wholesalers is least likely to be having cash flow problems?
A)Company A: Receivable turnover of 5;inventory turnover of 2
B)Company B: Receivable turnover of 2;inventory turnover of 5
C)Company C: Receivable turnover of 10;inventory turnover of 10
D)Company D: Receivable turnover of 1;inventory turnover of 1

Question

Quizplus · Accepted Answer

The two ratios are liquidity,which focus on the company's ability to survive in the short term,by converting assets to cash that can be used to pay current liabilities as they come due.
Company C has the highest receivables turnover and the highest inventory turnover,which means the company is selling its inventory quicker and collecting its receivable more quickly than the other companies.

Judging Only from the Ratios Below,which of the Following Clothing