Asked by
Ellie Madsen
on Dec 20, 2024Verified
Other things held constant, which of the following will DECREASE the current ratio, assuming an initial current ratio greater than 1.0?
A) Machinery is purchased using cash
B) Inventory is sold at cost for cash
C) Accounts payables are paid with cash
D) Both a & c
E) None of the above
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.
Accounts Payables
Liabilities representing amounts owed by a company to suppliers or creditors for goods and services received but not yet paid for.
- Calculate net working capital and its significance.
Verified Answer
SF
Learning Objectives
- Calculate net working capital and its significance.