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A company has a current ratio of 1.5. This ratio will decrease if the company Borrows cash on a 9-month note. Stock dividends do not
A company has a current ratio of 1.5. This ratio will decrease if the company Borrows cash on a 9-month note. Stock dividends do not affect the carrying value of the securities. It increases the numerator with no effect on the denominator, which causes the ratio to increase. Paying a current liability decreases current assets and liabilities equally, thereby increasing the ratio.
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