During the Current Year,a Company Issues $200,000 in Long-Term Bonds

question 145

Multiple Choice

During the current year,a company issues $200,000 in long-term bonds and buys $200,000 in inventory for cash.Which of the following statements is true regarding the company's year-end ratios?

• A)The quick ratio will stay the same and the times interest earned ratio will fall.
• B)The quick ratio will rise and the times interest earned ratio will rise.
• C)The quick ratio will rise but the times interest earned ratio will fall.
• D)The quick ratio will rise and the times interest earned ratio will stay the same.

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Definitions:

Numerator

The top part of a fraction, representing the number of parts out of the whole indicated by the denominator.

Denominator

The number below the line in a fraction, representing the total number of equal parts the numerator is divided into.

Add fractions

The process of combining fractions by finding a common denominator and then summing the numerators to create a single fraction.