Ask Experts Questions for FREE Help !
Ask

    Increasing the current ratio

    Asked Mar 5, 2007, 07:39 AM ó 3 Answers
    Propose several legitimate steps that management might take to increase the company's current ratio prior to year-end. (a chain of retail stores selling building materials, hardware and garden supplies)

    -Paying some debts.
    -Increasing your current assets from loans or other borrowings with a maturity of more than one year.
    -Converting non-current assets into current assets.
    -Increasing your current assets from new equity contributions.
    -Putting profits back into the business.
    Elaborate pleeasee.. :)

    Last edited by yungrockr; Mar 5, 2007 at 08:43 AM.
    Search this Question
    Share |
    3 Answers
    CaptainForest's Avatar
    CaptainForest Posts: 3,646, Reputation: 393
    Ultra Member
     
    #2

    Mar 6, 2007, 09:14 PM
    How does one increase current ratio?

    By either increasing Current Assets or by decreasing Current Liabilities.

    Pay debts.
    That does not increase current ratio, rather keeps it the same or decreases it, depending on if the debit was short or long term.

    Increase current assets with long term loans.
    That increase your CA, but does NOT increase your CL, therefore, increasing your overall current ratio.
    Helpful
    lniefer's Avatar
    lniefer Posts: 1, Reputation: 1
    New Member
     
    #3

    Nov 20, 2011, 10:27 PM
    Purchase of temporary investment for cash
    Helpful
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
    Ultra Member
     
    #4

    Nov 21, 2011, 06:30 AM
    This will not change your current ratio as you are increasing one current asset while decreasing another current asset by the same amount, therefore your current assets will not change.
    Helpful

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!

Current ratio [ 2 Answers ]

Barney co.'s current ratio is 2:1. Which of the following transactions would normally increase Barneys's current ratio? A. purchasing inventory on account B. borrowing money by signing a long-term note C. collecting an account receivable D. purchasing land for cash

Current Ratio [ 1 Answers ]

Suggest several reasons that a 2:1 current ratio may not be adequate for a particular company.:confused:

Current ratio [ 1 Answers ]

What effect, if any, does a payment received in full (receivable) is there on current ratio? -increase, decrease, or no effect - why?? Any help would be greatly appreciated!

Current Ratio [ 1 Answers ]

How would the following actions affect a firmís current ratio? 1. A customer prepays in full for specially ordered merchandise that it will take 60 days to manufacture. 2. Inventory is sold at the firmís normal 35% markup cost.

Affects on current ratio [ 1 Answers ]

How would the following actions affect a firm's current ratio? 1. inventory is sold 2. the firm takes out a bank loan to pay its suppliers 3. a customer pays its overdue bill 4. the firm uses cash to purchase additional inventories.


View more questions Search