A company's current ratio is 1.5, what is the effect of obtaining land by issuing shares of stock?

Question

Quizplus · Accepted Answer

Obtaining land by issuing shares of stock does not affect the current ratio because both the acquisition of the asset (land) and the increase in equity (issuing shares) are non-current items. The current ratio, which measures a company's ability to pay short-term obligations, is unaffected by transactions involving only non-current items.

A Company's Current Ratio Is 1