Ask Experts Questions for FREE Help !
Ask
    DiViNeJuStIcE13's Avatar
    DiViNeJuStIcE13 Posts: 2, Reputation: 1
    New Member
    		  
    #1

    Jun 18, 2013, 10:03 AM
    Does Issuance of long-term bonds change current ratio?
    Does issuance of long-term bonds increase, decrease, or have no effect on current ratio?
    Fidget1's Avatar
    Fidget1 Posts: 105, Reputation: 4
    Junior Member
    		  
    #2

    Jun 22, 2013, 08:35 AM
    The current ratio is just a quick test of how able an organisation is to pay its short term liabilities, so since the repayment of long term bonds don't figure in the current ratio calculation, then it should have no effect on the current ratio.
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
    Ultra Member
    		  
    #3

    Jun 22, 2013, 10:28 AM
    You are receiving Cash, which is a current asset and issuing bonds, which is a long-term liability.

    The effect of this transaction increases current assets by the full amount of cash received and there will be no change in current liabilities.
Not your question? Ask your question View similar questions
 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Bonds long term finacing [ 6 Answers ]

From the standpoint of the issuing company a disadvantage of using bonds as a means of long term finacing is that A bond interest is deductible for tax purposes B interest must be paid on a periodic basis regardless of earnings C income to stockholders may increase as a result of...

Current Vs. Long term Liabilities [ 1 Answers ]

I need help with my assignment... especially how to answer questions 4 . Please help... Thank you very much. Frederic Chopin Corporation is preparing its December 31, 2007, balance sheet. The following items may be reported as either a current or long-term liability. Instructions For...

View more questions Search