Which of the following events will cause a company’s current ratio to decrease? a. The sale of inventory for credit (accounts receivable) b. Issuing stock for cash c. The sale of inventory for cash d. Paying off long-term debt with cash
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| a. |
The sale of inventory for credit (
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| b. |
Issuing stock for cash
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| c. |
The sale of inventory for cash
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| d. |
Paying off long-term debt with cash
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- If a company has a current ratio of 1.5:1, what effects will the borrowing of cash by long-term debt and collection of accounts receivable have on the ratio? Decrease and decrease ) Decrease and no effect Increase and increase Increase and no effectWhich of the following statement is correct? Select one: O a. Return on assets is the ratio of net income after interest expense to total assets O b. All options are correct statement C. Average collection period is the average number of times it takes for the company's customers to pay their bills o d. Increase in the debt ratio indicate more reliance on debt as a source of financingats Which of the following would cause a company's current ratio to increase? The sale of a building for cash The sale of inventory for cash Paying off long term debts with cash. Selling inventory on credit.. None of the above.
- True or False Current Ratio is a measure used to assess the liquidity of the company, computed as current assets divided by current liabilities. * True O False Making sales using credit cards is a way a company can dispose its receivables.Assume that the company has a current ratio of 1.2. Now which of the above actions would improve this ratio. Which of the following actions would improve (i.e., increase) this ratio?• Use cash to pay off current liabilities.• Collect some of the current accounts receivable.• Use cash to pay off some long-term debt.• Purchase additional inventory on credit (i.e., accounts payable).• Sell some of the existing inventory at cost.Which of the following assumptions is embodied in the AFN equation? a. All balance sheet accounts are tied directly to sales. b. Common stock and long-term debt are tied directly to sales. c. Last year's total assets were not optimal for last year's sales. d. Fixed assets, but not current assets, are tied directly to sales. e. Accounts payable and accruals are tied directly to sales.
- How should the company respond to the ongoing situation to mitigate risk of failing the working capital given the following financial ratio? 1. Liquidity ratio : current ratio: 2.61xquick ratio: 2.56cash ratio: 0.85 2. Accounts receivable turnover: 4.08Ave collection period: 89.46 days 3. Inventory turnover: 38.76ave age of inventory: 9.42 4. Average payable turnover: 1.04ave payment period: 350.96 Note: Their working capital is 22,887,683 Current asset (37,127,683) - current liabilities (14,260,065) = 22,887,683Which of the following is included in the numerator of the Acid-Test Ratio calculation (check all that apply) A. Supplies B. Net Current Receivables C. Short-Term Investments D. Merchandise Inventory Which of the following ratios helps measure a company's ability to pay its current liabilities? (check all that apply) A. Accounts Receivable Turnover B. Days' Sales in Inventory C. Acid Test Ratio D. Cash RatioWhich of the following would not result in an increase in both the current ratio and the acid-test ratio? A. Increase in inventory B. Increase in accounts receivable C. Increase in cash D. Increase in current investments
- The current ratio: a. Is used to help assess a company's ability to pay its debts in the near future. b. Measures the effect of operating income on profit. c. Is used to measure the relationship between assets and long-term debt. d. Is used to measure a company's collection period.When a company borrows money from the bank, what is the impact on the accounting equation? Group of answer choices Assets decrease and labilities increase Assets increase and liabilities increase Assets decrease and liabilities decrease Assets increase and liabilities decrease50) Which of the following is true of the acid-test ratio? A) It measures a company's ability to pay its current liabilities. B) It measures the ability of the company to earn net income. C) It measures a company's ability to meet its short-term obligations with cash and cash equivalents. D) It indicates how much cash could be realized by selling the inventory. OA. It measures a company's ability to pay its current liabilities. OB. It measures the ability of the company to earn net income. OC. It measures a company's ability to meet its short-term obligations with cash and cash equivalents. D. It indicates how much cash could be realized by selling the inventory.
