Which one of the following would likely be most detrimental to a firm's current ratio if that ratio is currently 2?
A)collecting payment on an accounts receivable.
B)selling marketable securities at cost.
C)paying off accounts payable with cash.
D)purchasing inventory on credit.

Question

Quizplus · Accepted Answer

Purchasing inventory on credit will increase the firm's current liabilities (accounts payable), without affecting the current assets. This will result in a decrease in the current ratio.

Which One of the Following Would Likely Be Most Detrimental