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:

Conjunctivitis

An inflammation or infection of the outer membrane of the eyeball and the inner eyelid, known as pink eye.

Xerophthalmia

A medical condition characterized by dry eyes, often caused by a deficiency in vitamin A.

Trichiasis

A condition where eyelashes grow inward, potentially irritating the eye.

Emmetropia

The condition of the eye where the optical system is perfectly matched to the length of the eyeball, resulting in sharp vision at all distances.