Firms A and B have the same current ratio, 0.75, the same amount of sales, and the same amount of current liabilities. However, Firm A has a higher inventory turnover ratio than B. Therefore, we can conclude that A's quick ratio must be smaller than B's.
Answer the following statement true (T) or false (F)
False
Rationale: Firm A has the higher inventory turnover, S/I. So, given the same sales, A must have less inventory. Since the two firms have the same CR, A must have the higher QR, not the lower one. Therefore, the statement is false.
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