Part A

A Company has a current ratio of 2.0. If the company purchases inventory on credit what happens to their current ratio and their working capital?

	current ratio decreases working capital decreases
	current ratio stays the same working capital decreases
	current ratio decreases working capital stays the same
	current ratio stays the same working capital stays the same

Part B

A Company has cash of $50,000, accounts receivable of $100,000, inventory of $250,000, prepaid insurance of $200,000 and current liabilities of $300,000. What is their current ratio?

	600,000
	300000
	2.0
	1.33