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Multiple Choice

Assuming that the current ratio is currently 2, which of the following actions will increase it?
1. Purchasing inventory with cash.
2. Purchasing inventory on short-term credit.
3. Paying off a short-term bank loan with long-term debt.
4. None of the above increase the current ratio.
5. All of the above increase the current ratio.

In future value problems, the discount rate is adjusted:
upward to reflect higher risk and to increase the future cash flows.
upward to reflect higher risk and to reduce the future cash flows.
downward to reflect higher risk and to increase the future cash flows.
downward to reflect higher risk and to reduce the future cash flows.
None of the above.

Solution Preview

Assuming that the current ratio is currently 2, which of the following actions will increase it?

1. Purchasing inventory with cash.
2. Purchasing inventory on short-term credit.
3. Paying off a short-term bank loan with long-term debt.
4. None of the above increase the current ratio.
5. All of the above increase the current ratio. ...

Solution Summary

The solution has two multiple choice questions relating to current ratio and discount rate

$2.19