A company with a current ratio of 2.4 times will see that ratio decrease when the company
A) converts a short-term liability to a long-term liability.
B) borrows cash by issuing a short-term note payable.
C) declares a 10 percent stock dividend on its common stock.
D) pays a large current liability.

Question

Quizplus · Accepted Answer

Borrowing cash by issuing a short-term note payable increases current liabilities, which decreases the current ratio.

A Company with a Current Ratio of 2