What is the means for mr hammer is unsure

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Problem 1: Justin Hammer, CEO of Hammer Industries, is concerned whether his company may have a liquidity problem. He noted that the Quick Ratio for the past three years, starting in calendar year 2018 and ending in 2020 was calculated at 2.6%, 1.9%, and 1.7%, respectively. The current ratio was calculated for the same years as 2.0%, 1.5%, and 1.2%, respectively. Mr. Hammer is unsure what this means and turns to you for advice!

a. The quick ratio should always be larger than the current ratio.

b. Mr. Hammer should ask for more information before making any decisions and taking further action.

c. The quick ratio and the current ratio measures different components (thus should not be compared).

d. Mr. Hammer should order prices to be raised and slow inventory purchases before the ratios become even worse.

Reference no: EM132949685

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