Financial accounting 16th Edition by Jan Williams,Susan Haka,Mark Bettner ,Joseph Carcello

تمرين 58

Strategies to Improve the Current Ratio

Nashville Do-It-Yourself owns a chain of nine retail stores that sell building materials, hardware, and garden supplies.n early October, the company's current ratio is 1.7 to 1.his is about normal for the company, but it is lower than the current ratios of several large competitors.anagement feels that, to qualify for the best credit terms from its suppliers, the company's year-end balance sheet should indicate a current ratio of at least 2 to 1.
Instructions
a.ndicate whether taking each of the following actions would increase or decrease the company's current ratio.xplain your reasoning.
1.ay some of the company's current liabilities.
2.urchase large amounts of inventory on account.
3.ffer credit customers a special discount if they pay their account balance prior to year-end.
b.ropose several other ethical steps diat management might take to increase the company's current ratio prior to year-end.