Problem 1 Dallas Medical Group has a current ratio of 0.5 (see balance sheet below). ASSETS: Cash Accounts receivable Medical supplies Total current assets Net property and equipment Total assets LIABILITIES AND EQUITY Total current liabilities Total long-term debt Total liabilities EQUITY Total liabilities and equity $2,500 1,000 500 $4,000 $26,000 $30,000 $8,000 $12,000 $20,000 $10,000 $30,000 Which of the following actions would improve (increase) and which would weaken (decrease) the ratio? Hint: Complete the following table: Effect (Increase/Decrease) Action Use cash to pay off current liabilities Collect some accounts receivable Use cash to pay off some long-term debt Purchase additional medical supplies on credit Sell some of the net property and equipment at cost