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performance management(liquity)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › performance management(liquity)

  • This topic has 1 reply, 2 voices, and was last updated 13 years ago by AvatarJohn Moffat.
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  • September 6, 2012 at 9:44 am #54385
    Avatarsuku
    Participant
    • Topics: 3
    • Replies: 1
    • ☆

    what problem arise when the current ratio became high….

    September 8, 2012 at 7:19 am #104944
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54836
    • ☆☆☆☆☆

    Several things……

    It could be because the business is taking too long to collect receivables; or the level of inventory is too high (so more risk of it becoming obsolete etc..)

    Overall it could indicate too much money tied up in current assets that could instead be used to expand the business.

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