Christy would like to improve the current ratio of her firm, which is now 0.5, so that she will have a better chance of obtaining a working capital loan. Which of the following options would improve her current ratio?
A) use cash to pay off notes payable
B) collect some of her accounts receivables
C) purchase additional inventory on credit
D) borrow short-term funds to pay off some payables

Question

Quizplus · Accepted Answer

Purchasing additional inventory on credit increases current assets without affecting current liabilities, thus improving the current ratio.

Christy Would Like to Improve the Current Ratio of Her