Question
What does a higher defensive interval imply operationally?
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Answer
The firm can cover cash expenses for more days without new inflows.
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Question
When is the defensive interval especially useful compared with the current ratio?
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Answer
When assessing how many days operations can continue without new inflows.
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Question
What does the cash ratio, (Cash+ST Securities)/CL, show that broader ratios do not?
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Answer
Pure immediate cash coverage of current liabilities.
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Question
Which liquidity ratio is the most conservative, and why?
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Answer
Cash ratio; it uses only cash and short-term securities.
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