Bicksler Corporation Has a Current Ratio of 2

question 52

Multiple Choice

Bicksler Corporation has a current ratio of 2.0 on 21st July. On 22nd July, Bicksler purchased (and received) raw materials on credit from its supplier. Assuming all other things are equal, how will this transaction affect the current ratio of Bicksler?

• A) The current ratio will increase.
• B) The current ratio will decrease.
• C) The current ratio will become equal to its quick ratio.
• D) The quick ratio will become more than its current ratio.
• E) The current ratio will remain the same.

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Definitions:

Distributing Sale

The process of selling goods or services across various channels or locations to reach a larger market.

Standby Underwriting

Agreement where the underwriter agrees to purchase the unsubscribed portion of the issue.

Unsubscribed Portion

The part of a new security issue that is not sold or not taken up by investors during an offering period.

Standby Underwriting Agreement

This is a commitment by an underwriter to purchase any unsold shares in a public offering, ensuring the issuing company raises the full amount of capital sought.