The ratio of current assets and current liabilities at BHP is equal to 3. Suppose current assets and current liabilities increase by the same dollar amount. Consider the following statements: (I) net working capital increases (II) net working capital is unchanged (III) current ratio increases (IV) current ratio decreases Which of the following statements is correct? (I) and (III) are both true (II) and (III) are both true (II) and (IV) are both true (I) and (IV) are both true
Financial Ratios
A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.
Return on Equity
The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
The ratio of current assets and current liabilities at BHP is equal to 3. Suppose current assets and current liabilities increase by the same dollar amount.
Consider the following statements:
(I) net working capital increases
(II) net working capital is unchanged
(III) current ratio increases
(IV) current ratio decreases
Which of the following statements is correct?
(I) and (III) are both true
(II) and (III) are both true
(II) and (IV) are both true
(I) and (IV) are both true
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