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Given below are the current ratios for three companies. Suppose all three companies decide to increase their current assets and current liabilities by an identical
Given below are the current ratios for three companies. Suppose all three companies decide to increase their current assets and current liabilities by an identical amount. Which of the statements below would best describe the impact of this transaction on the current ratio of these firms? (Hint: refer to the discussion we had in class regarding Practice Question 2 from the slides.) Firm A 0.75x Firm B 1.00x Firm C 1.30x Current Ratio Firm A' current ratio will decrease, Firm B's current ratio will not change, and Firm C's current ratio will increase. O The current ratio of all three firms will increase. Firm A's current ratio will increase, Firm B's current ratio will not change, and Firm C's current ratio will decrease. Firm A's current ratio will increase, Firm B's current ratio will increase, and Firm C's current ratio will not change
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