Walter Industries' Current Ratio Is 0

question 57

Multiple Choice

Walter Industries' current ratio is 0.5.Considered alone,which of the following actions would increase the company's current ratio?

• A) Borrow using short-term notes payable and use the cash to increase inventories.
• B) Use cash to reduce accruals.
• C) Use cash to reduce accounts payable.
• D) Use cash to reduce short-term notes payable.
• E) Use cash to reduce long-term bonds outstanding.

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Definitions:

Gross Margin

The difference between revenue and the cost of goods sold, often expressed as a percentage of revenue, indicating the efficiency of a company in managing its production costs.

Relevant Range

The span of operations in which the beliefs regarding variable and fixed cost dynamics are accurate.

Product Costs

Costs directly associated with the production of goods, including direct labor, materials, and manufacturing overhead.

Period Costs

Costs that are expensed in the period in which they are incurred, not directly tied to the production process.