AIWMI Exam CCRA-L2 Topic 9 Question 110 Discussion

Actual exam question for AIWMI's CCRA-L2 exam

Question #: 110
Topic #: 9

Ms. Mary Brown is a credit rating analyst. She had prepared a detailed report on one of her client, FlyHigh

Airlines Ltd, a company operating chartered aircrafts in Indi

a. As she was heading for a meeting with her superior on the matter, coffee spilled over her set of prepared paper(s). As she was getting late for meeting, instead of preparing entire set she could recollect few numbers from her memory and reconstructed following partial financial table:

An analyst comparing two competitors Comp Systems and Big Tables gathers the data below:

Cash Conversions Cycle:

Comp Systems: 18 days and Big Tables 32 days

Defense Interval Ratio:

Comp Systems: 50 and Big Tables: 20

What can the analyst conclude regarding the liquidity of these companies?

ABoth indicators suggest that Comp Systems is more liquid than Big Tables

BBoth indicators suggest that Big Tables manages it/s cash better than Comp Systems

CBoth indicators give contradictory results

DWhile Comp Systems is more liquid as per the Cash conversion cycle, Big Tables manages its cash better as indicated by a lower, hence better Defense Ratio

Show Suggested Answer

Suggested Answer: C

by Yoko at Apr 06, 2025, 09:12 PM

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Deandrea

3 days ago

I agree with Vicki, D seems to make sense.

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Maurine

3 days ago

I'm not sure about this one. The indicators seem to give contradictory results. I might have to go with option C.

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Alisha

5 days ago

The question is pretty straightforward. The cash conversion cycle and defense interval ratio clearly show that Comp Systems is more liquid than Big Tables.

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Vicki

13 days ago

I think the answer is D.

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