Walter Industries' current ratio is 0.5.Considered alone,which of the following actions would increase the company's current ratio?
A) Borrow using short-term notes payable and use the cash to increase inventories.
B) Use cash to reduce accruals.
C) Use cash to reduce accounts payable.
D) Use cash to reduce short-term notes payable.
E) Use cash to reduce long-term bonds outstanding.

Question

Quizplus · Accepted Answer

?The following equation can be used.If you add equal amounts to the numerator and denominator,then if Orig CR = or > 1.0,CR will decline,but if Orig CR < 1.0,CR will increase.Obviously,if you add to one but not the other,CR will increase or decrease in a predictable manner.We see that a is correct. 11ea856c_8bf1_4af6_9aec_23fc6de5db49_TB1222_00 ?
Example:? 11ea856c_8bf1_7207_9aec_c50134ec707c_TB1222_00

Walter Industries' Current Ratio Is 0