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Cinema Theatre had a current ratio of 2.5 to 1 on December 31 of the current year. On that date, the company's assets were as
Cinema Theatre had a current ratio of 2.5 to 1 on December 31 of the current year. On that date, the company's assets were as follows:
Cash $ 100,000 Accounts receivable (net) 600,000 Inventory 960,000 Prepaid expenses 25,000 Equipment (net) 2,200,000 Total assets 3,885,000
What impact would collecting $55,000 due from customers have on its inventory turnover ratio?
Increase.
Decrease.
Stay the same.
Not enough information is given.
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