High levels of liquidity are most apt to indicate:
A) low levels of net working capital.
B) low profit margins.
C) high levels of economic value added.
D)inefficient use of assets.

Question

Quizplus · Accepted Answer

High levels of liquidity often indicate inefficient use of assets because excess cash or liquid assets could potentially be invested in more productive ways to generate higher returns. Liquidity is important for meeting short-term obligations, but excessive liquidity can suggest that a company is not effectively utilizing its assets to grow and generate profits.

High Levels of Liquidity Are Most Apt to Indicate