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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Brianne

28 days ago

I'm leaning towards option D as well. It's always a tricky balancing act between liquidity and cash management. Looks like Comp Systems and Big Tables have found different ways to approach it.

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Ashton

1 months ago

Wait, did someone spill coffee on the financial table? That's a real bummer. I hope Ms. Mary Brown didn't have to clean up too much of a mess before the meeting.

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Pete

3 days ago

According to the data, it seems like Comp Systems is more liquid than Big Tables.

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Leana

12 days ago

I know, right? Spilling coffee on important documents is the worst.

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Carri

17 days ago

Oh no, that must have been stressful for Ms. Mary Brown.

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In

1 months ago

Option D seems like the correct answer to me. Comp Systems has a better cash conversion cycle, but Big Tables manages its cash better according to the defense ratio.

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Filiberto

12 days ago

That's true. It's important to consider both indicators when assessing the liquidity of a company.

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Glenna

14 days ago

Yes, it makes sense. Comp Systems may be more liquid in terms of cash conversion cycle, but Big Tables seems to have better cash management.

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Callie

18 days ago

I agree, option D seems to be the most logical conclusion.

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Gennie

2 months ago

I'm not sure, but D does sound like a logical conclusion.

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Deandrea

2 months ago

I agree with Vicki, D seems to make sense.

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Maurine

2 months 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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Scarlet

12 days ago

True, but Big Tables has a better Defense Interval Ratio, showing better cash management.

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Orville

1 months ago

But Comp Systems has a lower Cash Conversion Cycle, indicating better liquidity.

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Chanel

1 months ago

I agree, the indicators do seem to contradict each other.

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Beatriz

1 months ago

I think option C is the right choice here.

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Alisha

2 months 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

2 months ago

I think the answer is D.

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