Selected financial ratios for Front Room Decorating Incorporated are as follows: 2021 2020 2019
Current ratio 2.50 : 1 2.0 : 1 1.75 : 1
Accounts receivable turnover 7 times 12 times 18 times
Inventory turnover 9 times 9.1 times 8.9 times
Front Room's current ratio increased in 2021. From an analysis of the above numbers, the most likely cause for the increase is
A) the company's cash has increased.
B) the company's inventory has increased.
C) the company's accounts receivable have increased.
D) the company borrowed on its line of credit to repay some current liabilities.
Correct Answer:
Verified
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