Would the following events increase or decrease a firms current ratio? a. Inventory is sold. b. The

Question:

Would the following events increase or decrease a firm’s current ratio?

a. Inventory is sold.

b. The firm takes out a bank loan to pay its suppliers.

c. The firm arranges a line of credit with a bank that allows it to borrow at any time to pay its suppliers.

d. A customer pays its overdue bills.

e. The firm uses cash to buy additional inventory.

Line of Credit
A line of credit (LOC) is a preset borrowing limit that can be used at any time. The borrower can take money out as needed until the limit is reached, and as money is repaid, it can be borrowed again in the case of an open line of credit. A LOC is...

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