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What happens to a firm's current ratio if...
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1. Inventory is purchased on credit. 2. Inventory is purchased using a short-term bank loan 3. a short-term bank loan is repaid I know 1 and 2 both decrease the current ratio, but I don't understand why. Won't they both increase by the same amount? 3 I know increases CR, but again, I don't...
Effect of current ratio
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Assume you work with the CFO of Fashions First, Inc. She reminds you that the fiscal year-end is only two weeks away and that she is looking to you to ensure the company stays in compliance with its loan covenant to maintain a current ratio of 1.25 or higher. A review of the general ledger...
Firm's current ratio
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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 bills. 4. The firm uses cash to purchase additional inventories Thank you View more questions Search
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