Commercial Pilot Licence (CPAER) – Canada · Question
A company's current ratio is 0.8:1, and its quick ratio is 0.4:1. What does this suggest about the company's short-term liquidity?
A current ratio below 1.0 (0.8:1) indicates poor short-term liquidity. The quick ratio being significantly lower (0.4:1) further suggests that a large portion o
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Question: A company's current ratio is 0.8:1, and its quick ratio is 0.4:1. What does this suggest about the company's short-term liquidity?
Answer options:
- The company has excellent liquidity. ✅ The company has poor liquidity and a significant portion of current assets are in inventory.
- The company relies heavily on non-current assets for liquidity.
- The company has too much cash on hand.
Correct answer: The company has poor liquidity and a significant portion of current assets are in inventory.
Explanation: A current ratio below 1.0 (0.8:1) indicates poor short-term liquidity. The quick ratio being significantly lower (0.4:1) further suggests that a large portion of the current assets are tied up in inventory, which is generally the least liquid current asset.
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Question explanations
- What is the minimum visibility required for a commercial VFR flight in Class D airspace at or below 3,000 feet
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- Scenario 1: A commercial pilot conducting an IFR flight in Canadian airspace must hold which of the following
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