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A Business Has Current Assets of $35,000 and Current Liabilities

Question 13

Multiple Choice

A business has current assets of $35,000 and current liabilities of $20,000. It collects its receivables more quickly and uses $10,000 of its cash at bank to repay a long-term debt. The effect on the working capital ratio after the long-term debt is repaid is to:


A) Increase from 175% to 250%
B) Increase from 175% to 350%
C) Decrease from 175% to 150%
D) Decrease from 175% to 125%

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