The Johnson Company has a current ratio of 1.45.The company has just sold $600,000 worth of merchandise on credit.What will the current ratio be after the sales on credit?
A) greater than 1.45
B) 1.45
C) less than 1.45
D) unable to determine without more information

Question

Quizplus · Accepted Answer

Selling merchandise on credit increases accounts receivable, which is a current asset, without affecting current liabilities, thus increasing the current ratio.

The Johnson Company Has a Current Ratio of 1