Two Companies Have an Identical Amount of Current Assets and Current

question 52

Multiple Choice

Two companies have an identical amount of current assets and current liabilities.Melia Inc.has 40% of its current assets invested in inventory, whereas Tesoro Corp.has 30% of its current assets invested in inventory.Which of the following statements is true?

• A)Melia will have the higher quick ratio.
• B)Melia will have the higher current ratio.
• C)The companies are equally liquid because their current ratios are the same.
• D)Melia is less liquid than Tesoro.

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