If a Company Has an Acid-Test Ratio of 1 $\quad$ Collection of Receivable
A

question 167

Short Answer

If a company has an acid-test ratio of 1.2:1, what respective effects will the borrowing of cash by short-term debt and collection of accounts receivable have on the ratio? Short-term Borrowing $\quad$ Collection of Receivable
a. $\quad$$\quad$ Increase $\quad$$\quad$$\quad$ No effect
b. $\quad$$\quad$ Increase $\quad$$\quad$$\quad$ Increase
c. $\quad$$\quad$ Decrease $\quad$$\quad$$\quad$ No effect
d $\quad$$\quad$ Decrease $\quad$$\quad$$\quad$ Decrease

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Definitions:

Equilibrium Quantity

The amount of goods or services available matches the amount people want to buy at the current market price.

Price of Rubber

The Price of Rubber refers to the current market price for rubber, which fluctuates based on supply and demand dynamics.

Technology of Tire Production

The methods and processes used in the manufacturing and design of tires, including materials selection, shaping, and curing techniques to meet specific performance criteria.

Equilibrium Price

The price at which the quantity of a good or service demanded equals the quantity supplied, resulting in a stable market condition.