If a Company Has a Current Ratio of 1 $\quad$ Collection of Receivable
A

question 242

Short Answer

If a company has a current 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. $\quad$ Increase $\quad$ $\quad$ $\quad$ No effect
b. $\quad$ Increase $\quad$ $\quad$ $\quad$ Increase
c. $\quad$ Decrease $\quad$ $\quad$ $\quad$ No effect
d. $\quad$ Decrease $\quad$ $\quad$ $\quad$ Decrease

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Definitions:

Gallon

A unit of volume for liquid measure in the United States, equal to 3.785 liters.

Gas

A state of matter characterized by high compressibility and expansion to fill any container, often used as a fuel.

Twenty-Dollar Bill

Currency note of the United States valued at twenty dollars, featuring the portrait of President Andrew Jackson.

Empty

Lacking content, occupants, or value; not filled or occupied.