Jones,Inc.has a current ratio equal to 1.40.Which of the following transactions will increase the company's current ratio?
A) The company collects $500,000 of its accounts receivable.
B) The company sells $1 million of inventory on credit.
C) The company pays back $50,000 of its long-term debt.
D) The company writes a $30,000 check to pay off some existing accounts payable.

Question

Quizplus · Accepted Answer

Paying off accounts payable reduces current liabilities, which increases the current ratio, assuming current assets remain constant.

Jones,IncHas a Current Ratio Equal to 1