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Can someone please check my answer to this question:
In recent years, a company has greatly increased its current ratio. At the same time, the quick ratio has fallen. What has happened? Has the liquidity of the company improved?
My answer: The decrease in the quick ratio shows that the company spent money on purchasing inventory. The liquidity of the company has not improved because inventory is not liquid.
In recent years, a company has greatly increased its current ratio. At the same time, the quick ratio has fallen. What has happened? Has the liquidity of the company improved?
My answer: The decrease in the quick ratio shows that the company spent money on purchasing inventory. The liquidity of the company has not improved because inventory is not liquid.
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