Your Boss Decides That Your Firm Will Switch from a Restrictive

question 246

Multiple Choice

Your boss decides that your firm will switch from a restrictive short-term financial policy to a more flexible policy. You should expect to see the firm's current ratio:

• A) Rise, due to the higher investment in current assets and the reduced use of short-term financing.
• B) Fall, due to the lower investment in current assets and the increased reliance on short-term financing.
• C) Rise, due to the lower investment in current assets and the greater use of short-term financing.
• D) Fall, due to the higher investment in current assets and the reduced use of short-term financing.
• E) To either rise or fall, but the use of short-term debt will increase.