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Current Ratio

Asked Jun 3, 2006, 10:08 AM — 1 Answer
How would the following actions affect a firm

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CaptainForest Posts: 3,684, Reputation: 2085
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#2

Jun 3, 2006, 04:25 PM
1)
Dr. Prepaid
Cr. Cash

CA goes up and down by an equal amount, therefore no change to Current Ratio

2)
Dr. Cash
Cr. Inventory
Cr. Revenue

CA goes up more than it goes down.

Net, CA goes up, CL stays the same, so Current Ratio goes up.
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