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Many Companies Have to Monitor Closely Certain Ratios, Such as the Current

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Essay

Many companies have to monitor closely certain ratios, such as the current ratio, due to debt covenants. Selected transactions are provided below for a company that uses a perpetual inventory system; sells its merchandise at a selling price that exceeds cost; and had a current ratio of 1.85 and a quick ratio of 1.19 before the event occurred. Many companies have to monitor closely certain ratios, such as the current ratio, due to debt covenants. Selected transactions are provided below for a company that uses a perpetual inventory system; sells its merchandise at a selling price that exceeds cost; and had a current ratio of 1.85 and a quick ratio of 1.19 before the event occurred.   Required: In the above table, indicate whether each transaction would increase (+), decrease (-), or not affect (0) the company's current ratio and quick ratio. Required:
In the above table, indicate whether each transaction would increase (+), decrease (-), or not affect (0) the company's current ratio and quick ratio.

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Definitions:

Geographic Movement

Refers to the migration or movement of people, goods, and ideas across different geographic locations.

Revolutionary War

The conflict between the Thirteen American colonies and British government that led to the independence of the United States, occurring from 1775 to 1783.

Concrete Step

A specific, actionable measure taken to achieve a particular goal or to implement a plan.

Financial Compensation

Payment provided to someone in exchange for an injury, loss, or the performance of a service or job.

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