Your company has just sold some inventory.What impact does this have on the company's current ratio?
A)There is no impact; the current ratio remains the same.
B)The current ratio will increase as a result of sale.
C)The current ratio will decline as a result of the sale.
D)More information is needed to determine the impact.

Question

Quizplus · Accepted Answer

The impact on the current ratio from selling inventory depends on several factors, such as how the proceeds from the sale are used (e.g., to pay off current liabilities, to purchase more inventory, or to hold as cash) and the profit margin on the sale. Without this information, it's impossible to determine the exact impact on the current ratio.

Your Company Has Just Sold Some Inventory