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true or false from a liquidity perspective, the cash ratio is stricter than the quick ratio...

true or false

  1. from a liquidity perspective, the cash ratio is stricter than the quick ratio and the current ratio
  1. compared to a chain of luxury hotels, a chain of pizza restaurants should have a higher asset turnover, but a lower operating profit margin
  1. quick ratio = ( current assets- inventory ) / current liabilities
  1. return on equity = EBIT / equity
  2. at the end of 2017, amazon’s cash conversion cycle was minus 21.6 days; its average collection period was 19.8 days; its days of inventory were 37.4 days. therefore amazon’s average payment period was 78.8 days. is that last statement true or false?
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Answer #1

Answer to Q#1 (First question in the list) TRUE Reason: Liquidity ratio refers to the ratio that shows firms liquidity position in the sense whether firm has sufficient liquid assets to meet its current obligations effectively. There are three liquid assets such as current ratio, quick ratio and cash ratio Liquid assets are those assets which can be converted in to cash easily within a short period of time. From the liquidity perspective, quick ratio is stricter than current ratio as quick asset contains cash & cash equivalents, Accounts receivable, etc. only whereas the current assets consist of inventory, prepaid expenses, etc. However, cash ratio is stricter than quick ratio as cash assets consists of cash & cash equivalents only. As a result, from a liquidity perspective, the cash ratio is stricter than the quick ratio and the current ratio

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