Asked by
Molly Bebber
on Dec 05, 2024Verified
Hodges Company has a current ratio of 1.6 to 1.Salaries payable accrued last quarter are paid this quarter.What is the effect of this payment on the current ratio this quarter?
A) increase
B) decrease
C) no effect
D) cannot determine from information presented
Current Ratio
A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year, calculated as current assets divided by current liabilities.
Salaries Payable
An account representing the amounts owed to employees for work performed but not yet paid.
- Recognize the value of liquidity, solvency, and profitability ratios in evaluating a firm's financial condition.
Verified Answer
SG
Learning Objectives
- Recognize the value of liquidity, solvency, and profitability ratios in evaluating a firm's financial condition.
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