Question $2$

Intella's current assets total to $$20$ million versus $$10$ million of current liabilities, while AWD's currents assets $$10$

million versus $$20$ million of current liabilities. Both firms would like to "window dress" their end$-$of$-$year financial

statements, and to do so they tentatively plan to borrow $$10$ million on a short$-$term basis and to then hold the

borrowed funds in their cash accounts. Which of the statements below best describes the results of these transactions?

A$.$ The transactions would improve Intella's financial strength as measured by its current ratio but lower AWD's current ratio.

B$.$ The transactions would lower Intella's financial strength as measured by its current ratio but raise AWD's current ratio.

C$.$ The transactions would have no effect on the firm' financial strength as measured by their current ratios.

D$.$ The transactions would lower both firm' financial strength as measured by their current ratios.

E$.$ The transactions would improve both firms' financial strength as measured by their current ratios.