A Company with $70,000 in Current Assets and $50,000 in Current

question 113

Multiple Choice

A company with $70,000 in current assets and $50,000 in current liabilities pays a $1,000 current liability. As a result of this transaction, the current ratio and working capital will

• A) both decrease
• B) both increase
• C) increase and remain the same, respectively
• D) remain the same and decrease, respectively

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Definitions:

Earnings Ratio

Earnings ratio typically refers to financial metrics that compare various aspects of a company's earnings to other measures, such as its share price in the price-to-earnings ratio.

Discriminate

To make a distinction in favor of or against a person or thing based on the group, class, or category rather than individual merit.

Employment Discrimination

Unfair treatment of employees or job applicants based on race, gender, age, religion, nationality, disability, or other protected characteristics, rather than on merit.