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GreenChapeau, Inc. is planning to relax its credit terms. This will increase the companys accounts receivable balance. To finance this increase, GreenChapeau will increase its
GreenChapeau, Inc. is planning to relax its credit terms. This will increase the companys accounts receivable balance. To finance this increase, GreenChapeau will increase its short-term loans (i.e., increase notes payable). GreenChapeau believes that this event will have no affect on either sales or costs, and therefore no affect on net income. All else constant, this new policy should cause the firms current ratio (assuming a current ratio of 0.7) to:
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