If a Company Has a Current Ratio of 1

question 64

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? $$\begin{array} { l c } ~~~~~\text {Short-term Borrowing } & \text { Collection of Receivables } \\\text { a) increase } & \text { no effect } \\\text { b) decrease } & \text { increase } \\\text { c) decrease } & \text { no effect } \\\text { d) decrease } & \text { decrease }\end{array}$$

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Definitions:

Information Flow

The transfer or movement of information within a system or among various systems.

Protein Synthesis

The process by which cells build proteins based on the instructions encoded in DNA, consisting of transcription and translation stages.

DNA

Deoxyribonucleic acid, a molecule that carries the genetic instructions used in the growth, development, functioning, and reproduction of all known living organisms.

mRNA

Messenger RNA, a type of RNA that conveys genetic information from DNA to the ribosome, where it specifies the amino acid sequence of the protein products of gene expression.