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A company has a current ratio of 0.75 to 1, based on current assets of $3 million and current liabilities of $4 million. Required:

A company has a current ratio of 0.75 to 1, based on current assets of $3 million and current liabilities of $4 million. Required: 1a. How, if at all, will a $500,000 cash purchase of inventory affect the current ratio? 1b. What would be the new current ratio? 2a. How, if at all, will a $500,000 purchase of inventory on account affect the current ratio? 2b. What would be the new current ratio?

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