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Determine the effect of the following scenario on each of the following ration: Current Ratio Gross Margin Ratio Cash Flows to Assets Deal ONLY with
Determine the effect of the following scenario on each of the following ration: Current Ratio Gross Margin Ratio Cash Flows to Assets Deal ONLY with the facts provided in the scenario, and determine the direct effects of the scenario ONLY in the current period. Assume no effect on the market price of stock. Assume the Current Ratio prior to any scenario was 2:1. Current Ratio - (Current Assets) / (Current Liabilities) Gross Margin Ratio - (Gross Margin) / (Net Sales) Cash Flows to Assets Ratio = (Net Cash Flows from Operating Activities) / (Average Total Assets) Smoky Pig BBQ prepaid for twelve months of rent last period. In the current period, one month of rent was used. Multiple Choice Current Ratio will decrease, no effect on the Gross Margin Ratio, and the Cash Flows to Assets Ratio will decrease Current Ratio will increase, no effect on the Gross Margin Ratio, and the Cash Flows to Assets Ratio will decrease Current Ratio will decrease, no effect on the Gross Margin Ratio, and the Cash Flows to Assets Ratio will increase Current Ratio will increase, no effect on the Gross Margin Ratio, and the Cash Flows to Assets Ratio will increase
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