Assume a Company Now Has a Current Ratio of 3

question 57

Multiple Choice

Assume a company now has a current ratio of 3. Just before year end, it decides to pay back some of its current liabilities, using its cash. Which of the following statements is correct regarding the effect of this decision?

• A) The current ratio will decrease.
• B) Its interest coverage ratio will increase.
• C) Its capital structure leverage ratio will decrease.
• D) Its return on assets will decrease.

---

Definitions:

Psychographic Segmentation

A marketing technique that divides consumers into sub-groups based on shared psychological characteristics, values, desires, or lifestyles.

Metropolitan Statistical Areas

Geographic regions defined by high population density at their core and close economic ties throughout the area, often used for statistical purposes.

Psychographic Segmentation

The division of a market into segments based on consumer psychology, including their lifestyles, values, attitudes, and personality traits.

Consumers' Opinions

Refers to the beliefs, perceptions, or attitudes that individuals hold regarding products, services, or brands based on their personal experiences.