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A company plans to issue new common stick and use the proceeds to pay off some of its short-term debt. Assume that the company, which

A company plans to issue new common stick and use the proceeds to pay off some of its short-term debt. Assume that the company, which does not pay any dividends, takes this action, and that total assets, operating income (EBIT), and its tax rate all remain constant. Which of the following would occur?

1. the current ratio will decrease

2. the current ratio will increase

3. the company's taxable income, will decline

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