medium10 pts · first answer countsratio-analysisliquidity

Old stock in the current ratio

A garment exporter has a current ratio of 1.8, but 40% of its inventory is from seasons two years old. What should an analyst do?

A.Accept the 1.8 ratio as reliableB.Haircut the stock; liquidity is overstatedC.Add the old stock to the cash balanceD.Ignore inventory in all ratios

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