what is the effect of purchase supples on accout on current ratio?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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what is the effect of purchase supples on accout on
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Step 1
Current ratio is the one that shows the current assets as numerator and current liabilities as
denominator. This ratio indicates the short term liquidity of the firm or it shows whether the
company is able to pay off its current obligations using the current assets or not. If the company has
its ratio more than 2:1, then its performance is good or vice versa.
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