if current ratio increases and quick ratio decreases what is most likely going on? a. inventory is becoming a larger part of the current assets b. cash is becoming a larger part of the current assest c. accounts receivable is becoming a larger part of current assets d. property, plant, and equipment are growing e. none of the above

if current ratio increases and quick ratio decreases what is most likely going on? a. inventory is becoming a larger part of the current assets b. cash is becoming a larger part of the current assest c. accounts receivable is becoming a larger part of current assets d. property, plant, and equipment are growing e. none of the above

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 20MCQ

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Similar questions

Which of the following would not result in an increase in both the current ratio and the acid-test ratio? A. Increase in inventory B. Increase in accounts receivable C. Increase in cash D. Increase in current investments
Other things held constant, which of the following will DECREASE the current ratio, assuming an initial current ratio greater than 1.0? a. Machinery is purchased using cash b. Inventory is sold at cost for cash c. Accounts payables are paid with cash d. Machinery is purchased using cash & Accounts payables are paid with cash e. None of these
Assume that the company has a current ratio of 1.2. Now which of the above actions would improve this ratio. Which of the following actions would improve (i.e., increase) this ratio?• Use cash to pay off current liabilities.• Collect some of the current accounts receivable.• Use cash to pay off some long-term debt.• Purchase additional inventory on credit (i.e., accounts payable).• Sell some of the existing inventory at cost.
Company X is competing with company Y. These are their ratios: x y Current Ratio = .223 Current Ratio = .146 Cash Ratio = .057 Cash Ratio = .031 Quick Ratio = .105 Quick Ratio = .072 Based on liquidity and short term assets, which company is doing better?
Indicate the effects of the transactions listed, on current assets, current ratios and net income. Use (increase) to indicate an increase, (decrease) to indicate a decrease and (no effect) to indicate no effect or an indeterminate effect. A fixed asset is sold for more than book value. Net income will ______ Answer 1 A fully depreciated asset is retired. Net income will experience ______ An increase in inventory turnover ratio signifies _____________________ in a firm's efficiency. Merchandise is sold for cash. Total current assets will ________
Which of the following events will cause a company’s current ratio to decrease? a. The sale of inventory for credit (accounts receivable) b. Issuing stock for cash c. The sale of inventory for cash d. Paying off long-term debt with cash
Cash flow from operating activities is increased by: a. depreciation and amortization b. a decrease in accounts receivable c. a decrease in inventory d. an increase in accounts payable e. all of these
Which one of the following will decrease net working capital? Select one: a. A decrease in accounts payable. b. A sale of inventory at a profit. c. A sale of a fixed asset for cash. d. An increase in accounts receivable. e. An increase in accounts payable.
If the dollar amount in ending accounts payable is greater than the dollar amount in beginning accounts payable, then a. inventory must have increased during the period. b. cost of goods sold must be greater in this period than in the prior period. c. cost of goods sold must have increased by the same amount. d. payments to suppliers during the period must have been less than the amount of inventory purchased on account. e. cash must have decreased by the same amount. Choose the best answer choice
If a firm’s current ratio less quick ratio is 1.0, then: a. the firm’s inventory is equal to its current assets b. the firm’s cash is equal to its current liabilities c. the firm’s accounts receivable are equal to its current assets d. the firm’s inventory is equal to its current liabilities
Which of the following statements is true about the Days' Cash on Hand ratio? a.It is not useful in comparing different businesses to one another. b.It may be useful in determining whether a business is able to meet its cash commitments. c.It uses all current assets in the numerator of the ratio. d.The only operating expense used in the denominator of the ratio is depreciation expense
Which of the following assumptions is embodied in the AFN equation? a. All balance sheet accounts are tied directly to sales. b. Common stock and long-term debt are tied directly to sales. c. Last year's total assets were not optimal for last year's sales. d. Fixed assets, but not current assets, are tied directly to sales. e. Accounts payable and accruals are tied directly to sales.