Question

You find that Costco Corp. has the current ratio of 1.04, while the industry average current...

You find that Costco Corp. has the current ratio of 1.04, while the industry average current ratio is 1.10. You would conclude that

Costco has less short-term liquidity when compared to its peers.

Costco outperforms its peers in terms of short-term liquidity.

Costco has more short-term liquidity when compared to its peers.

Costco is a good shape in terms of short-term liquidity.

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Answer #1

Current ratio helps in determining short term liquidity of a company.

Since current ratio of costco corp is lower than industry.

Costco would have lower short - term liquidity compared to industry.

The first option is correct.

Kindly do inform me in case you have any queries.

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