A Company Has Current Assets of $200,000 and Current Liabilities

question 62

Multiple Choice

A company has current assets of $200,000 and current liabilities of $150,000.If they used cash to pay off some accounts payable, what would the effect be on their current ratio?

• A)The current ratio would increase.
• B)The current ratio would decrease.
• C)The current ratio would stay the same.
• D)The effect on the current ratio would depend on the amount paid.

Calculate and interpret financial ratios to assess organizational financial health.

Understand the applications of just-in-time (JIT) scheduling in managing production and minimizing costs.

Familiarize with the concepts and calculations related to asset management and leverage.

Recognize the importance and methodology of financial performance measures.

---

Definitions:

Information in Action

Information in action signifies the practical use and application of data and information to make decisions, solve problems, or trigger specific processes and activities.

Contextual

Pertaining to or based on the context or surroundings of something, especially words or events that influence meaning or effect.

Relevant

Relevant means closely connected or appropriate to the matter at hand, often used to describe information or data that directly applies to a topic or situation.

Distinct

Clearly different or distinguishable in nature, significance, or characteristics.