The Johnson Company Has a Current Ratio of 1

question 54

Multiple Choice

The Johnson Company has a current ratio of 1.45.The company has just sold $600,000 worth of merchandise on credit.What will the current ratio be after the sales on credit?

• A) greater than 1.45
• B) 1.45
• C) less than 1.45
• D) unable to determine without more information

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Definitions:

Asset Sale

A type of business transaction where a company sells its assets, such as equipment, inventory, or real estate, rather than its stock.

Registration Statement

A set of documents, including financial statements and other significant details, filed with a regulatory body prior to issuing securities to the public.

SEC

The U.S. Securities and Exchange Commission, a federal government agency responsible for regulating the securities industry and protecting investors.

Securities

Financial instruments representing ownership (stocks), a debt agreement (bonds), or the rights to ownership (derivatives) that can be bought and sold.