ZuoTi.Pro
Question

3. Christy would like to improve the current ratio of her firm, which is now 0.5, so that she will have a better chance of obtaining a working capital loan. Which of the following options would improve her current ratio? a. use cash to pay off notes payable b. collect some of her accounts receivables c. purchase additional inventory on credit d. borrow short -term funds to pay off some payables
business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

correct option is "C"

Purchase of inventory will improve current ratio .

Example:say existing current asset = 50000 and current liability = 100000 .Also any increase or decrease in current asset or liability is 10000

Existing a b c d
current ratio [current asset /current liability] 50000/100000= .50

[50000-10000]/[100000-10000]

.44

[50000+10000-10000]/100000

.50

[50000+10000]/[100000+10000]

60000/110000

.54

50000/[100000-10000+10000]

.50
0 0
Add a comment
Know the answer?
Add Answer to:
3. Christy would like to improve the current ratio of her firm, which is now 0.5,...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • QUESTION 10 Which of the following actions will improve the current ratio? O a. Take a...

    QUESTION 10 Which of the following actions will improve the current ratio? O a. Take a nine-month loan from the bank to pay off some of its suppliers b. Accelerate the collection of accounts receivable c. Sell off some old equipment d. All of these

  • Which of these actions would likely result in a lower current ratio? Question 10 options: Increasing...

    Which of these actions would likely result in a lower current ratio? Question 10 options: Increasing cash by selling excess fixed assets. Holding more stocks to offer better customer service. Allowing major customers more time to pay bills. Extending the time to pay suppliers

  • Which of the following would improve Liquidity: ( a )   Factoring a business’s Accounts Receivable (...

    Which of the following would improve Liquidity: ( a )   Factoring a business’s Accounts Receivable ( b )   Using surplus cash to buy Land and Buildings ( c )   Paying all Accounts Payable sooner                        ( d )   Increasing employees wages ( e )   All of the above 2        If the Net Profit Ratio decreases, which of the following will NOT improve the ratio: ( a )   Increasing the sales price ( b )   Finding a cheaper supplier of your product...

  • P 6-24 Required Answer the following multiple-choice questions: a. A company's current ratio is 2.2 to...

    P 6-24 Required Answer the following multiple-choice questions: a. A company's current ratio is 2.2 to 1 and quick (acid-test) ratio is 1.0 to 1 at the beginning of the year. At the end of the year, the company has a current ratio of 2.5 to 1 and a quick ratio of 0.8 to 1. Which of the following could help explain the divergence in the ratios from the beginning to the end of the year? (continued R6-Liquidity of Short...

  • 1-b. Based on the above calculation and analysis of TripAdvisor's current ratio 2.15, indicate which company...

    1-b. Based on the above calculation and analysis of TripAdvisor's current ratio 2.15, indicate which company is in a better position to pay liabilities. O Edward Allen O TripAdvisor PA2-3 Part 2 2. Analyze transactions (a)-(e) to determine their effects on the accounting equation. (Enter any decreases to account balances with a minus sign. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) Assets Liabilities Stockholders' Equity b. d . Edward Allen Interiors Inc. is a leading...

  • E13.19 (LO 4) (Ratio Computations and Effect of Transactions) Presented below is information related to Carver...

    E13.19 (LO 4) (Ratio Computations and Effect of Transactions) Presented below is information related to Carver Inc. Carver Inc. Balance Sheet December 31, 2020 Cash $ 45,000 Notes payable (short-term) $ 50,000 Receivables $110,000 Accounts payable 32,000  Less: Allowance 15,000 95,000 Accrued liabilities 5,000 Inventory 170,000 Common stock (par $5) 260,000 Prepaid insurance 8,000 Retained earnings 141,000 Land 20,000 Equipment (net) 150,000 $488,000 $488,000 Carver Inc. Income Statement For the Year Ended December 31, 2020 Sales revenue $1,400,000 Cost of...

  • can you please give feed back to this.. like add something or give a comment about...

    can you please give feed back to this.. like add something or give a comment about the following posts. 1) Profit Margin = NetincomeSales Profit margin is very useful in analyzing the financial health of the firm because it indicates how much money is generated per every dollar in sales. A higher profit margin means there are low expense ratios relative to sales. In other words, it tells us how a company uses its income. When a company has a...

  • E13-19 (L04) (Ratio Computations and Effect of Transactions) Presented below is information related to Carver Inc...

    E13-19 (L04) (Ratio Computations and Effect of Transactions) Presented below is information related to Carver Inc CARVER INC. BALANCE SHEET DECEMBER 31, 2017 50,000 32,000 5,000 260,000 141,000 Cash Receivables $ 45,000 Notes payable (short-term) Accounts payable Accrued liabilities Common stock (par $5) Retained earnings $110,000 15,000 Less: Allowance Inventory Prepaid insurance Land Equipment (net) 95,000 170,000 8,000 20,000 150,000 $488,000 $488,000 CARVER INC INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017 Sales revenue $1,400,000 Cost of goods sold...

  • Which of the following would not be used to help a company determine the net realizable...

    Which of the following would not be used to help a company determine the net realizable value of its accounts receivable? a. Industry averages and trends b. The company’s ability to pay its own debts c. Current economic conditions d. Efficiency of the company’s collection procedures 2. Which principle states that expenses should be recorded in the period in which they help generate revenues? a. Matching principle b. Going concern principle c. Cost/benefit analysis d. Measurement principle 3. SunFun Company...

  • I need help with this problem. I'm out of my depth with this. Thank you kindly....

    I need help with this problem. I'm out of my depth with this. Thank you kindly. Morton Mercado, the CFO of Kanton Company, carefully developed the estimates of the firm's total funds requirements for the coming year. These are shown in the following table: Month Total Funds Month Total Funds January $1,000,000 July $6,000,000 February $1,000,000 August $5,000,000 March $2,000,000 September $5,000,000 April $3,000,000 October $4,000,000 May $5,000,000 November $2,000,000 June $7,000,000 December $1,000,000 In addition, Morton expects short-term financing...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT