7

A company has a debt contract in place which requires that the company's working capital ratio (current assets/ current liabilities) must never fall below 2 (meaning that current assets must be at least twice current liabilities). As balance date approaches, the company estimates that the working capital ratio will be 1.8 and the company may default on its debt contract unless remedial action is taken. Which of the following actions, consistent with Positive Accounting Theory, will increase the company's working capital ratio? SELECT ONE CORRECT RESPONSE Select one: a. Collection of cash for accounts receivable b. Sales of inventory at cost price c. All of the options are correct d. Reclassification of borrowings due within 12 months as non-current liabilities e. Purchase of long-term investment property by a cash payment at balance date