Below is selected data for Gertup Corporation as of 12/31/05:
$$\begin{array} { l r }
\text { Total assets } & \$ 5,500 \
\text { Current assets } & 2,750 \
\text { Long-term debt } & 450 \
\text { Current ratio } & 2.5 \
\text { Inventory } & 1,500 \
\text { For year ended 12/31/05 } & \
\text { Sales } & \$ 18,500 \
\text { Cost of goods sold } & 14,800
\end{array}$$
-Gertup has increased its borrowing since last year, in part to finance the increased credit terms offered to customers. Which of the following actions would not decrease its borrowing?
A)Decrease dividends paid
B)Increase profit margin
C)Change from LIFO to FIFO for inventory cost purposes
D)Replace cash dividends with stock dividends

Question

Below is selected data for Gertup Corporation as of 12/31/05:
 $$\begin{array} { l r } 
\text { Total assets } & \$ 5,500 \
\text { Current assets } & 2,750 \
\text { Long-term debt } & 450 \
\text { Current ratio } & 2.5 \
\text { Inventory } & 1,500 \
\text { For year ended 12/31/05 } & \
\text { Sales } & \$ 18,500 \
\text { Cost of goods sold } & 14,800
\end{array}$$
-Gertup has increased its borrowing since last year, in part to finance the increased credit terms offered to customers. Which of the following actions would not decrease its borrowing?
A)Decrease dividends paid
B)Increase profit margin
C)Change from LIFO to FIFO for inventory cost purposes
D)Replace cash dividends with stock dividends

Quizplus · Accepted Answer

Changing from LIFO to FIFO for inventory cost purposes would not directly affect borrowing, as it primarily impacts the cost of goods sold and inventory valuation, not cash flow or borrowing needs.

Below Is Selected Data for Gertup Corporation as of 12/31/05