Question: A) Current Ratio: What effect would the following actions have on a firms current ratio? Assume that net working capital is positive. Inventory is purchased.

A) Current Ratio: What effect would the following actions have on a firms current ratio? Assume that net working capital is positive.

Inventory is purchased.

A supplier is paid.

A short-term bank loan is repaid.

A long-term debt is paid off early.

A customer pays off a credit account.

Inventory is sold at cost.

Inventory is sold for a profit.

B) Current Ratio and Quick Ratio: In recent years, Dixie Co. has greatly increased its current ratio. At the same time, the quick ratio has fallen. What has happened? Has the liquidity of the company improved?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

1 Current Ratio What effect would the following actions have on a firm's current ratio? Assume that net working capital is positive. a. Inventory is purchased. b. C. d. e. f. g. A supplier is paid. A...

Please answer in excel. a-g 3.1 Current Ratio. What effect would the following actions have on a firm's current ratio? Assume that net working capital is positive. a. Inventory is purchased. b. A...

Current Ratio. What effect would the following actions have on a firm's current ratio? Assume that net working capital is positive. a. Inventory is purchased. b. A supplier is paid. c. A short-term...

Current Ratio What effect would the following actions have on a firms current ratio assume that net working capital is positive. a. Inventory is purchased. b. A supplier is paid. c. A short-term bank...

Current Ratio . What effect would the following actions have on a rms current ratio? Assume that net working capital is positive. Inventory is purchased. A supplier is paid. A short-term bank loan is...

Question 2- Ratio Analysis (3 marks): What effect would the following actions have on a firm's current ratio? Assume that net working capital is positive: Inventory is purchased for cash a. b. A...

What effect would the following actions have on a firm's current ratio? Assume the net working capital is positive: (1) Inventory is purchased using cash (2) Inventory is purchased on account (3) A...

1. Based only on the following information for Ortiz Corp., did cash go up or down? By how much? Classify each event as a source or use of cash. Decrease in inventory $425 Decrease in accounts...

1. After the switch in the circuit has been open for a long time, it is closed at t = 0. Calculate I at t = Sus. 50 mA (5 kn 20 k 200 mH m m 10 V 1=0 2. The switch in the circuit has been at position...

The financial statements of Zetar plc are presented in Appendix C. Instructions Use the companys complete annual report, available at www.zetarplc.com, to answer the following questions. (a)...

1 . Consider two hypothetical companies, Company X and Company Y , operating in the same industry. Both companies have similar asset turnover ratios, but their return on equity ( ROE ) figures...

Which project management tool uses the analogy "skateboard - bicycle - motorcycle - car"? Group of answer choices Scrum Waterfall Fate - Gate Star - gate

2. There is a lot of discussion about the need for diver-sity in organizations. What are some of the major benefits inclusive organizations experience?

9.1 List and briefly discuss the importance of the steps in leading organizational change.

9.2 Explain the strategic importance of career planning and development.