[chiquitita254]

Assuming a current ratio of 1.0 and an acid-test ratio of 0.80, how will the borrowing of cash by issuing a six-month note payable affect each ratio?

Decrease the current ratio and decrease the acid-test ratio.
Increase the current ratio and increase the acid-test ratio.
No change to the current ratio and increase the acid-test ratio.
Decrease the current ratio and increase the acid-test ratio.

[chiquitita254]

Region Jet has a $50 million liability at December 31, 2012, of which $10 million is payable in 2013. In its December 31, 2012 balance sheet, the company reports the $50 million debt as


A $10 million current liability and a $40 million long-term liability on the balance
Sheet.
A $50 million long-term liability on the balance sheet.
A $50 million current liability on the balance sheet.
A $40 million current liability and a $10 million long-term liability on the balance sheet.

[Curlyben]

What do YOU think ?
While we're happy to HELP we won't do all the work for you.
Show us what you have done and where you are having problems..

[chiquitita254]

I already figured it out 10 million current and 40 long term. I was just having a hard time trying to figure out how you categorize the two things.

[chiquitita254]

For the ratio question I thought that if you increase the liabilities (increasing the denominator) that both would decrease, but I was wrong. What am I missing?