- CFA Exams
- CFA Level I Exam
- Study Session 7. Financial Reporting and Analysis (2)
- Reading 24. Financial Analysis Techniques
- Subject 1. Analysis Tools and Techniques
CFA Practice Question
The following table presents selected common-size income and balance sheet data for Curative Drugs.
What can be said about Curative's liquidity?
A. With increasing current assets as a proportion of total assets, its liquidity is deteriorating.
B. Due to lower ROE, its liquidity is declining as it is becoming less profitable.
C. Based on the information provided, nothing can be concluded about Curative's liquidity.
Explanation: Unless we know the extent of its current liabilities, nothing can be said about Curative's liquidity on the basis of the information given.
User Contributed Comments 1
| User | Comment |
|---|---|
| RCapistrano | Liquidity ratios such as Current Ratio, Quick Ratio, and Cash Ratio requires the current liability value in their denominator. |