If a Company Uses Cash to Pay Off Some of Its

question 70

Multiple Choice

If a company uses cash to pay off some of its accounts payables, what effect will this have on its liquidity ratios, given that the ratios exceeded 1.0 before the payoff?

• A)The quick ratio and current ratio will both increase
• B)The quick ratio and the current ratio will both decrease
• C)The quick ratio will increase but the current ratio will remain unchanged
• D)The current ratio will increase but the quick ratio will remain unchanged

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