Assume That a Company's Current Ratio Is 2

question 126

Multiple Choice

Assume that a company's current ratio is 2.0. If the company purchases inventory on credit, which of the following is true?

• A)The current ratio will increase.
• B)The current ratio will decrease.
• C)There will be no net impact on the current ratio.
• D)The current ratio will change, but there will be no effect on the quick ratio.

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Definitions:

Middle Manager

A managerial position that acts as a bridge between top management and lower levels of staff, typically responsible for translating strategic goals into operational plans.

Decision Quality

The level of effectiveness and efficiency of decisions based on their outcomes and impacts.

Employee Commitment

The level of dedication and loyalty an employee has towards their employer, often reflected in their willingness to go above and beyond in their job.

Leader Decision Style

The approach or method leaders use to make decisions, varying from autocratic to democratic or consultative.