If All Else Is Held Equal, an Increase in the Current

question 53

Multiple Choice

If all else is held equal, an increase in the current ratio of a company is generally considered to be an indication that:

• A)the company will have increased difficulty meeting short-term obligations.
• B)current liabilities have increased.
• C)the company will be better able to meet short-term debt obligations.
• D)current assets have decreased.

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Definitions:

Perpetual Inventory System

A method used by businesses to keep a real-time record of inventory levels, constantly updating with every sale and purchase.

Merchandise Inventory

Goods that a company holds for the purpose of selling them to customers.

Perpetual Inventory System

A method of inventory management where updates to inventory levels are made in real-time following every sale or purchase.

Merchandise Inventory

Goods that a retail merchandising business holds for sale to customers.