An Increase in Current Liabilities Will Have Which One of the Following

question 80

Multiple Choice

An increase in current liabilities will have which one of the following effects,all else held constant? Assume all ratios have positive values.

• A)increase in the cash ratio
• B)increase in the net working capital to total assets ratio
• C)decrease in the quick ratio
• D)decrease in the cash coverage ratio
• E)increase in the current ratio

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Definitions:

Stockholders' Equity

Stockholders' equity represents the ownership interest of shareholders in the assets of a corporation, after deducting liabilities.

Net Profit Margin Ratio

A profitability metric that calculates the percentage of revenue remaining as profit after all expenses are deducted from total sales.

Unit Selling Price

The price at which a single unit of a product or service is sold to customers.

Operating Expenses

Expenses incurred from a company's operational activities, not including the cost of goods sold, typically including selling, general, and administrative expenses.