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Question 8: Gil Corp. has current assets of $90,000 and current liabilities of $180,000. Which of the following transactions would improve Gil's current ratio? a)
Question 8: Gil Corp. has current assets of $90,000 and current liabilities of $180,000. Which of the following transactions would improve Gil's current ratio? a) Paying $20,000 of short-term accounts payable. b) Purchasing $50,000 of merchandise inventory with a short-term account payable. c) Collecting $10,000 of short-term accounts receivable. d) Refinancing a $30,000 long-term mortgage with a short-term note. Question 9: In comparing the current ratios of two companies, why is it invalid to assume that the company with the higher current ratio is the better company? a) A high current ratio may indicate inefficient use of some assets. b) A high current ratio may indicate inadequate inventory on hand. c) The current ratio includes assets other than cash. d) The two companies may define working capital in different terms
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