Effect on cash levels and current ratio
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Indicate the effect of the following actions on cash levels and current ratio. Assume the company has a current ratio greater than one. Indicate whether the effect is to increase (I), decrease (D), or if it has no effect (NE). Consider each action independent from the others.
Current Ratio Cash
Sell accounts receivable at face value
Pay suppliers more slowly
Sell equity
Change from FIFO to weighted average inventory
Increase bad debt expense
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Solution discusses the effect of the following actions on cash levels and current ratio
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Indicate the effect of the following actions on cash levels and current ratio. Assume the company has a current ratio greater than one. Indicate whether the effect is to increase (I), decrease (D), or if it has no effect (NE). Consider each ...
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