Current Ratio. What effect would the following actions have on a firm's current ratio? Assume that net working capital is positive. a. Inventory is purchased. b. A supplier is paid. c. A short-term bank loan is repaid. d. A long-term debt is paid off early. e. A customer pays off a credit account. f. Inventory is sold at cost. g. Inventory is sold for a profit. LO 3.2

Current Ratio. What effect would the following actions have on a firm's current ratio? Assume that net working capital is positive. a. Inventory is purchased. b. A supplier is paid. c. A short-term bank loan is repaid. d. A long-term debt is paid off early. e. A customer pays off a credit account. f. Inventory is sold at cost. g. Inventory is sold for a profit. LO 3.2

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Which of the following would indicate an improvement in a company's financial position, holding other things constant? The profit margin declines. O The MV/BV ratio increases. The ROA decreases. The TIE increases. O The liability-to-asset ratio increases.
Which company is more liquid and which company is more solvent? HAL SLB Liquidity Current Ratio 2.32 1.17 Quick Ratio 1.51 0.79 Solvency Liabilities to equity 1.72 0.93 Times-interest-earned 4.45 5.68
which one is correct please confirm? QUESTION 9 In using the percentage of sales forecasting method, the assumption is that ______________. a. there is a direct relationship between notes payable and sales b. accounts payable will not increase proportionally with sales c. there is a direct relationship between long-term debt and sales d. inventories will increase proportionately with sales
Please answer multi-choice question in photo.
D All else being equal, which one of the following will decrease a firm's current ratio? Question 17 a decrease in the net fixed assets a decrease in depreciation O a decrease in accounts payable O a decrease in a counts receivables
1 When examining the current ratio and looking at the company's liquidity, which of the following ratios would NOT assist with evaluating liquidity? A) inventory turnover B) receivables turnover C) quick ratio D) profit margin
Suppose a firm wants to maintain a specific TIE ratio. It knows the amount of its debt, the interest rate on that debt, the applicable tax rate, and its operating costs. With this information, the firm can calculate the amount of sales required to achieve its target TIE ratio. a. True b. False
Which of the following actions will increase a company's quick ratio? (a) Reduce inventories and use the proceeds to reduce long-term debt.(b) Reduce inventories and use the proceeds to reduce current liabilities.(c) Issue short-term debt and use the proceeds to purchase inventory.(d) Issue equity and use the proceeds to purchase inventory.