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Problem 5. NGIWI Inc. has shown the following details as of yearend: AR P 200 000 Interest payable in 3 mos. 25 000 AP 80 000 Inventory 440 000 Bonds payable due in 10 yrs. 500 000 Land 800 000 Cash 100 000 Notes payable due in 6 mos. 250 000 NGIWI Inc. will use cash to pay 50% of the accounts payable. What will happen to the current ratio and the acid test/quick ratio? (Just indicate INCR/DECR)

Problem 5. NGIWI Inc. has shown the following details as of yearend: AR P 200 000 Interest payable in 3 mos. 25 000 AP 80 000 Inventory 440 000 Bonds payable due in 10 yrs. 500 000 Land 800 000 Cash 100 000 Notes payable due in 6 mos. 250 000 NGIWI Inc. will use cash to pay 50% of the accounts payable. What will happen to the current ratio and the acid test/quick ratio? (Just indicate INCR/DECR)

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter16: Working Capital Policy And Short-term Financing
Section: Chapter Questions
Problem 14P
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Problem 5. NGIWI Inc. has shown the following details as of yearend: AR P 200 000 Interest payable in 3 mos. 25 000 AP 80 000 Inventory 440 000 Bonds payable due in 10 yrs. 500 000 Land 800 000 Cash 100 000 Notes payable due in 6 mos. 250 000 NGIWI Inc. will use cash to pay 50% of the accounts payable. What will happen to the current ratio and the acid test/quick ratio? (Just indicate INCR/DECR)
Transcribed Image Text:Problem 5. NGIWI Inc. has shown the following details as of yearend: AR P 200 000 Interest payable in 3 mos. 25 000 AP 80 000 Inventory 440 000 Bonds payable due in 10 yrs. 500 000 Land 800 000 Cash 100 000 Notes payable due in 6 mos. 250 000 NGIWI Inc. will use cash to pay 50% of the accounts payable. What will happen to the current ratio and the acid test/quick ratio? (Just indicate INCR/DECR)
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