As of December 31,Year 1,Gant Corporation Had a Current Ratio

question 6

Multiple Choice

As of December 31,Year 1,Gant Corporation had a current ratio of 1.29,quick ratio of 1.05,and working capital of $18,000.The company uses a perpetual inventory system and sells merchandise for more than it cost.On January 1,Year 2,Gant issued common stock at par value for $10,000 cash.Which of the following statements is true?

• A)Gant's current ratio will decrease.
• B)Gant's current ratio will increase.
• C)Gant's quick ratio will decrease.
• D)Gant's working capital will decrease.

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Definitions:

Market Rate Of Interest

The prevailing rate at which borrowers and lenders agree to transact, typically influenced by supply and demand in the financial markets.

Present Value

The today's value of money or cash flows to be received in the future, factored by a particular rate of return.

Oil Reserve

Quantities of crude oil that are held underground or in storage, available for extraction and use.

Market Rate Of Interest

The prevailing rate at which interest is paid by borrowers for loans or earned by investors in the marketplace, determined by supply and demand forces.