Alpha Enterprise Has Total Current Assets of $2,000,000 and Total

question 24

Multiple Choice

Alpha Enterprise has total current assets of $2,000,000 and total current liabilities of $800,000.If the company purchases $100,000 of inventory for cash,while none of its other assets and liabilities change,its current ratio will ________.

• A)increase
• B)decrease
• C)stay the same
• D)The answer cannot be determined from the information given.

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Definitions:

Cash Flow

Cash flow represents the net amount of cash and cash-equivalents being transferred into and out of a business over a specified period.

Investing Activities

Refers to the purchase and sale of long-term assets and other business investments within a specific period.

Dividends Paid

Distributions of a portion of a company’s earnings, decided by the board of directors, to a class of its shareholders.

Net Income

The company's earnings remaining after deducting all expenses and tax obligations from its total revenues.