Recently the M&M Company has been having problems. As a result, its financial situation has deteriorated. M&M approached the First National Bank for a badly needed loan, but the loan officer insisted that the current ratio (now 0.5) be improved to at least 0.8 before the bank would even consider granting the credit. Which of the following actions would do the most to improve the ratio in the short run? *   a. Using some cash to pay off some current liabilities       b. Collecting some of the current accounts receivable.       c. Paying off some long-term debt.       d. Purchasing additional inventory on credit (accounts payable)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Recently the M&M Company has been having problems. As a result, its financial situation has deteriorated. M&M approached the First National Bank for a badly needed loan, but the loan officer insisted that the current ratio (now 0.5) be improved to at least 0.8 before the bank would even consider granting the credit. Which of the following actions would do the most to improve the ratio in the short run? *
 
a. Using some cash to pay off some current liabilities
 
 
 
b. Collecting some of the current accounts receivable.
 
 
 
c. Paying off some long-term debt.
 
 
 
d. Purchasing additional inventory on credit (accounts payable)
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