The Johnson Company Has a Current Ratio of 1

question 13

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:

Debtor

An individual or entity that owes money or is under financial obligation to another party.

Trustee

A person or organization that holds and administers property or assets for the benefit of a third party.

Assignee

A person or entity to whom rights or interests are transferred by another, known as the assignor.

Creditors

Individuals or entities that are owed money or other obligations by debtors.