1. a.modern medical devices has a current ratio of 0.5. which of the following actions would improve ( i.e., increase) this ratio? use cash to pay off current liabilities. collect some of the current accounts receivable. use cash to pay off some long term debt. purchase inventory on credit(i. e., accounts payable). sell some of the existing inventory at cost.additional invent.

b assume that the company has a current ratio of 1.2.

2. Southwest physicians, a medical group practice, is just being formed. it will need $2 million total assets to generate $3 million in revenues. furthermore, the group expects to have a profit margin of 5 percent. the group is consideringtwo financing alternatives. first it canuse all-equity financing by requiring each physician to contribute his or her pro rata share. alternatively the practice can finance up to 50 percent of its assets with a bank loan. assumingthat the debt alternative has no impact on the expected ROE if the group finances with 50 percentdebt versus the expected ROE if it finances entirely with equity capital?