If a Firm's Current Ratio Exceeds 1

question 79

Multiple Choice

If a firm's current ratio exceeds 1.0, what happens as a result of paying cash to reduce accounts payable?

• A) Net working capital increases.
• B) Net working capital decreases.
• C) Current ratio increases.
• D)Current ratio decreases.

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Definitions:

Business Population

The total number of businesses within a specific area or category at a given time.

Sole Proprietorships

Business entities owned and operated by one person, where there is no legal distinction between the owner and the business.

Corporations

Legal entities that are separate and distinct from their owners, capable of owning assets, incurring liabilities, and engaging in business activities.

Partnerships

A legal form of business operation between two or more individuals who share management and profits.