Question
Pepsi Corporation's quick ratio is 1.2, while Coke Company's quick ratio is 2.2. Both firms want to window dress their coming end-of-year financial statements. As
Pepsi Corporation's quick ratio is 1.2, while Coke Company's quick ratio is 2.2. Both firms want to "window dress" their coming end-of-year financial statements. As part of their window dressing strategy, each firm will double its current liabilities by adding short-term debt and placing the funds obtained in the cash account. Which of the statements below best describes the actual results of these transactions? a. The transactions will have no effect on the current ratios. b. The quick ratios of both firms will be increased. c. The quick ratios of both firms will be decreased. d. Only Pepsi Corporation's quick ratio will be decreased.
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