ACT Company has a current ratio of 1.2:1. What respective effects will the borrowing of cash by taking out a short-term loan and the collection of accounts receivable have on the companys current ratio?

Short-term Borrowing Collection of Receivable

Option A Increase No effect

Option B Increase Increase

Option C Decrease Decrease

Option D Decrease No effect

Answer:

Option A

Option B

Option C

Option D