Which of the following statements is generally incorrect from an investor's perspective?
A) A 1:1 current ratio is generally preferred over a 2:1 current ratio.
B) A 20-day average collection period for accounts receivable is generally preferred over a 30-day average collection period.
C) A 5% dividend yield is generally preferred over a 3% dividend yield.
D) A 10% net margin is generally preferred over an 8% net margin.

Question

Quizplus · Accepted Answer

A 2:1 current ratio indicates a company has more current assets than current liabilities, which can be seen as a positive for investors. A 1:1 current ratio suggests the company may struggle to pay off its liabilities in the short term.

Which of the Following Statements Is Generally Incorrect from an Investor's