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Company A has total assets of $125,000 and current assets of $25,000. Their cash and receivables were $15,000 in sum and they had no marketable securities. Company A has current liabilities of $15,000.

Company B has total assets of $115,000 and current assets of $35,000. Their cash, marketable securities, and receivables were $20,000 in sum. Company B has current liabilities of $10,000.

Which of the following is true regarding the liquidity of these two companies?

A. Both the current and quick ratio indicate that Company B is the most liquid.

B. The current ratio, but not the quick ratio, indicates Company B is more liquid.

C. Both the current and quick ratio indicate that Company A is the most liquid.

D. The current ratio, but not the quick ratio, indicates Company A is more liquid.

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92833047

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