Z has a current ratio of 1.5, a quick ratio of 0.4 and a positive cash balance. If it purchases inventory on credit, what is the effect on these ratios? Current ratio Quick ratio Decrease Decrease Decrease Increase Increase Decrease Increase Increase ABCD

Z has a current ratio of 1.5, a quick ratio of 0.4 and a positive cash balance. If it purchases inventory on credit, what is the effect on these ratios? Current ratio Quick ratio Decrease Decrease Decrease Increase Increase Decrease Increase Increase ABCD

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Z has a current ratio of 1.5, a quick ratio of 0.4 and a positive cash balance. If it purchases
inventory on credit, what is the effect on these ratios?
Current ratio
Quick ratio
A
Decrease
Decrease
B
Decrease
Increase
Increase
Decrease
Increase
Increase

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