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    Current ratio notes

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    A. A firm has $1.2 million in current assets and $1.0 million in current liabilities. If it uses $.5 million of cash to pay off some of its accounts payable, what will happen to the current ratio? What happens to net working capital?

    B. A firm uses cash on hand to pay for additional inventories. What will happen to the current ratio? What will happen to the quick ratio?

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    https://brainmass.com/economics/finance/current-ratio-notes-216412

    Solution Preview

    A. current ratio = current assets / current liabilities = 1.2 /1.0 = 1.2
    When it uses $.5 million of cash to pay off some of its accounts payable, ...

    Solution Summary

    Current ratio notes are provided.

    $2.19