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:

Loanable Funds

The funds available for borrowing in the financial markets, derived from the savings of individuals and institutions.

Price Floor

A price floor set by a government or an organization, establishing the minimum price that can be charged for a good, service, or resource.

Price Ceiling

A cap set by authorities on the maximum price that can be asked for a good or service.

Shortage

Occurs when the demand for a product or service exceeds its supply in a given market, often leading to increased prices.