A Firm Has $600,000 in Current Assets and $150,000 in Current

question 90

Multiple Choice

A firm has $600,000 in current assets and $150,000 in current liabilities.Which of the following is correct if it uses cash to pay off $50,000 in accounts payable?

• A) Current ratio will increase to 5.0.
• B) Net working capital will increase to $500,000.
• C) Current ratio will decrease.
• D) Net working capital will not change.

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Definitions:

Small Business

An independently owned and operated company that is limited in size and revenue according to the industry and country in which it operates.

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A company that provides individuals and organizations access to the Internet, typically for a fee.

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A Personal Identification Number, a numeric or alphanumeric password used to authenticate a user to a system.