Talk:Current ratio
Add topicLatest comment: 16 years ago by 72.72.111.234 in topic Example question
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Example question
[edit]Article says, "For example, if inventory turns over much more rapidly than the accounts payable become due, then the current ratio will be less than one (this is true for McDonalds). This can allow a firm to operate with a low current ratio." Wouldn't the inventory turn over and create cash or A/R? So this does not explain why MCD Current Ratio is below 1.
- (Replying to myself above) I understand Cash does not go directly into Cash/Current assets but is reflected as Revenues, which gets winnowed down into Net Income before being reflected in Current Assets. 72.72.111.234 (talk) 07:19, 13 April 2010 (UTC)