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 would increase the firm's current liabilities, which would decrease the current ratio (since current ratio is calculated by dividing current assets by current liabilities).

Which One of the Following Would Likely Be Most Detrimental