Asked by
Amahri Johnson
on Dec 09, 2024
Verified
All else unchanged, which of the following is true when a firm sells a fixed asset on credit (an account receivable is created) ?
A) The current ratio goes up but the quick ratio is unchanged.
B) The current ratio goes up but the quick ratio declines.
C) The quick ratio goes up but the current ratio is unchanged.
D) The quick ratio goes up but the current ratio declines.
E) The quick ratio and the current ratio both go up.
Current Ratio
This ratio evaluates the ability of a business to meet its short-term liabilities by utilizing its current assets.
Quick Ratio
A gauge of a business's capability to cover its short-term debts using its most readily accessible assets.
Fixed Asset
Long-term tangible assets that a company uses in its operations to generate income, such as buildings, machinery, and equipment.
- Examine common-size financial statements to understand their impact on a company's financial well-being.
- Analyze the consequences of operational adjustments on financial indices and company-wide effectiveness.
Verified Answer
OJ
Learning Objectives
- Examine common-size financial statements to understand their impact on a company's financial well-being.
- Analyze the consequences of operational adjustments on financial indices and company-wide effectiveness.