Pier Imports Inc. is a merchandiser with a December 31 year-end. Management is reviewing its nancial statements in December, anticipating its year-end. The company is concerned about its liquidity situation as evidenced by its declining current ratio over the past year. The projected current ratio at year-end is 0.83 (current assets of $500,000 over current liabilities of $600,000). The following suggestions are oered as ways to improve its liquidity position for nancial statement reporting. 1. Pledge current accounts receivable to obtain a $75,000 short-term loan, discounted at $8,000. Half of the proceeds would be used to pay down accounts payable. 2. Pledge current accounts receivable to obtain a $75,000 long-term loan. Half of the proceeds would be used to pay down accounts payable. 3. Sell receivables of $100,000 to a factor with a 20% fee. Half of the proceeds would be used to pay down ac- counts payable. 4. Hold open the year-end for one extra week to collect on its receivables ($20,000) and record additional sales ($20,000) while paying down accounts payable ($20,000).

Required a. Estimate the impact on the current ratio for each of these suggestions. b. For each situation, identify any ethical issues. Explain