Asked by
Ethan Schock
on Oct 09, 2024Verified
Windham Corporation has current assets of $400,000 and current liabilities of $500,000.Windham Corporation's current ratio would be increased by:
A) the purchase of $100,000 of inventory on account.
B) the payment of $100,000 of accounts payable.
C) the collection of $100,000 of accounts receivable.
D) refinancing a $100,000 long-term loan with short-term debt.
Current Ratio
A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year.
Current Liabilities
Financial obligations a company is required to pay within one year, such as accounts payable and short-term loans.
Accounts Payable
Liabilities owed by a business to its suppliers or vendors for goods and services purchased on credit.
- Understand the computation and importance of working capital and its role in indicating a firm's immediate fiscal well-being.
Verified Answer
UM
Learning Objectives
- Understand the computation and importance of working capital and its role in indicating a firm's immediate fiscal well-being.