A Qbank question was asking about the most likely interpretation of the liquidity position of a company.
A ) difficulty meeting short - term obligations
B) serious liquidity compared to the industry
C) managed their inventory more efficiently than the industry
I thought this was a trick question. The company’s inventory turnover was indeed much better than the industry’s and the current ratio was about half of the peers. The correct answer given is C)
Is Inventory turnover really a liquidity measure? Isn’t it supposed to be an efficiency ratio?
Thanks in advance for any help