Jones Company's current ratio is higher than the average for its industry,while its quick ratio is below the industry average.One possible interpretation for these results is that Jones carries more inventory than most companies in its industry.

Question

Quizplus · Accepted Answer

A current ratio higher than industry average indicates that Jones has a higher proportion of current assets relative to current liabilities, which could be due to higher inventory levels. Meanwhile, a lower quick ratio indicates a lower proportion of highly liquid assets, such as cash and accounts receivable, relative to current liabilities, which could also be a result of higher inventory levels.

Jones Company's Current Ratio Is Higher Than the Average for Its