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:

State Bank

A financial institution that is chartered by a state government, as opposed to a national or federal charter.

Securitization

The process of pooling various types of contractual debt such as mortgages or loans and selling them as consolidated financial instruments to investors.

Transferred Receivables

The act of selling accounts receivable to another party, often for the purpose of immediate cash flow improvement.

Securities

Financial instruments that represent an ownership position in a publicly-traded corporation, a creditor relationship with a governmental body or a corporation, or rights to ownership as represented by an option.