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- Topic: Financial Stmt question - can help please?
| Author | Topic: Financial Stmt question - can help please? |
|---|---|
| Agoothi @2014-04-17 23:21:02 |
Using cash to reduce account payable will _______, what will happen to current ratio and quick ratio? a) Increase both the current ratio and quick ratio b) Reduce both the current ratio and quick ratio c) Increase both the current ratio but have no effect on the quick ratio d) Not have any effect on current ratio or quick ratio |
| banik @2014-04-18 14:36:40 |
question is incomplete lets take CA 200,000 and CL 150,000 CR=200,000/150,000=1.33 cash paid 20,000 then CA is 180,000 and CL is 130,000 CR= 1.38 here CR increases NOW LETS TAKE ANOTHER SITUATION CA=100,000 and CL= 120,000 CR= 0.833 cash paid for AP 20000 CA=80,000 and CL=100,000 CR= 0.80 here CR decreases. the same goes for Quick ratio. the question does not specify whether CA > or < CL so it cannot be determined. |
| Sandar @2014-04-18 19:42:27 |
its simple.. CR = current assets/ current liabilities and Quick ration, the same.. cash reduced, current assets reduced --> CR reduced |
| Agoothi @2014-05-01 17:32:42 |
Hi Banik Thanks for your time to explain! Good luck in your exam too! |
CFA Discussion Topic: Financial Stmt question - can help please?
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
