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A Company Has the Following Current Assets and Current Liabilities

question 92

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A company has the following current assets and current liabilities (all figures in '000s) :  Cash and accounts receivable $1,000 Inventory and prepaid expense 1,000 Current liabilities 1,500\begin{array} { l r } \text { Cash and accounts receivable } & \$ 1,000 \\\text { Inventory and prepaid expense } & 1,000 \\\text { Current liabilities } & 1,500\end{array} The company is concerned about not looking liquid enough and is considering using $500,000 of their cash to pay down the some bank debt.What would be the effect on their current ratio and quick ratio?
 Current  Quick  Ratio  Ratio A. Increase  Increase B. Increase  Decrease C. Decrease  Increase D. Decrease  Decrease \begin{array}{ll}&\text { Current } & \text { Quick } \\&\text { Ratio } & \text { Ratio }\\A.&\text { Increase } & \text { Increase } \\B.&\text { Increase } & \text { Decrease } \\C.&\text { Decrease } & \text { Increase } \\D.&\text { Decrease } & \text { Decrease }\end{array}


Definitions:

Groups

Sets of subjects or items that are classified together based on shared characteristics or for purposes of an experiment or study.

Total N

The total number of observations, subjects, or participants included in a study or experiment.

Degrees Of Freedom

The number of independent pieces of information on which a statistical estimate is based, minus the number of parameters estimated.

Groups

Collections of individuals or items classified together based on common characteristics or for the purpose of analysis.

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