Indicate the Effect of the Following Actions on Cash Levels

question 82

Essay

Indicate the effect of the following actions on cash levels and current ratio. Assume the company has a current ratio greater than one. Indicate whether the effect is to increase (I), decrease (D) or if it has no effect (NE). Consider each action independently of others. $\begin{array}{lr}&\text { Current Ratio}&\text { Cash }\\ \text { Increased credit limits to maintain sales levels } &\\ \text { Convert to just-in-time inventory system } &\\ \text { Change from FIFO to weighted average inventory } &\\ \text { method (rising prices)} &\\ \text { Pay suppliers more slowly} &\\ \text {Sell accounts receivable at face value } &\\ \text { Capitalize leases that were previously classified} &\\ \text {as operating leases } &\\ \text { Increase bad debt expense } &\\ \text { Sell equity} &\\ \text { Issue stock dividend} &\\ \text { Write-down inventory} &\\ \text { } &\\\end{array}$

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Definitions:

Insulation

Material used to prevent the transmission of heat, sound, or electricity.

Presynaptic Terminals

The part of a neuron that connects to another neuron and releases neurotransmitters to transmit signals across the synapse.

Axon

Tubelike structure of a neuron that carries the neural message from the cell body to the axon terminals for communication with other cells.

Myelin

Fatty substances produced by certain glial cells that coat the axons of neurons to insulate, protect, and speed up the neural impulse.