A Company Issues $200,000 in Long-Term Bonds and Buys $200,000

question 31

Multiple Choice

A company issues $200,000 in long-term bonds and buys $200,000 in inventory for cash. Which of the following statements is true?

• A) The quick ratio will stay the same and the times interest earned ratio will fall.
• B) The quick ratio will rise and the times interest earned ratio will rise.
• C) The quick ratio will rise but the times interest earned ratio will fall.
• D) The quick ratio will rise and the times interest earned ratio will stay the same.

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Definitions:

Hookworm

A parasitic nematode that lives in the small intestine of its host, which can be humans, and causes anemia and malnutrition through blood loss.

Trichinosis

Infection caused by the roundworm Trichinella spiralis.

Nematocysts

Specialized cells in the tentacles of cnidarians such as jellyfish, used for capturing prey and defense through the release of toxins.

Cnidarian

Invertebrates existing as either a polyp or medusa, with two tissue layers and radial symmetry.