Safeco's current assets total $20 million,versus $10 million of current liabilities,while Risco's current assets are $10 million,versus $20 million of current liabilities.Both firms would like to "window dress" their end-of-year financial statements,and to do so they tentatively plan to borrow $10 million on a short-term basis and to then hold the borrowed funds in their cash accounts.Which statement below best describes the results of these transactions?
A)The transactions would raise Safeco's financial strength as measured by its current ratio but lower Risco's current ratio.
B)The transactions would lower Safeco's financial strength as measured by its current ratio but raise Risco's current ratio.
C)The transactions would lower both firms' financial strength as measured by their current ratios.
D)The transactions would improve both firms' financial strength as measured by their current ratios.

Question

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The Answer of Safeco's current assets total $20 million,versus $10 million of current liabilities,while Risco's current assets are $10 million,versus $20 million of current liabilities.Both firms would like to "window dress" their end-of-year financial statements,and to do so they tentatively plan to borrow $10 million on a short-term basis and to then hold the borrowed funds in their cash accounts.Which statement below best describes the results of these transactions?
A)The transactions would raise Safeco's financial strength as measured by its current ratio but lower Risco's current ratio.
B)The transactions would lower Safeco's financial strength as measured by its current ratio but raise Risco's current ratio.
C)The transactions would lower both firms' financial strength as measured by their current ratios.
D)The transactions would improve both firms' financial strength as measured by their current ratios.

Safeco's Current Assets Total $20 Million,versus $10 Million of Current