Lilly's Corporation has working capital of $620,000, and Harmon Corporation has working capital of $840,000. Which of the following statements is incorrect?
A. If Lilly Corporation is smaller than Harmon or has lower current liabilities; Lilly could be more liquid than Harmon.
B. Since working capital is an absolute amount, other factors such as size of the company and materiality will help to determine liquidity of these two companies.
C. Since Harmon's working capital exceeds Lilly's working capital, it is safe to conclude that Harmon is more liquid than Lilly.
D. None of these answers is correct.
Answer: C
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