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Find purchase of inventory on account affect current ratio

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Reference no: EM131522389

Question: 1. Determine whether each of the following changes in risk ratios is good news or bad news about a company.

a. Increase in receivables turnover.

b. Decrease in inventory turnover.

c. Increase in the current ratio.

d. Increase in the debt to equity ratio.

2. Pro Leather, a supplier to sporting goods manufacturers, has a current ratio of 0.90, based on current assets of $450,000 and current liabilities of $500,000. How, if at all, will a $100,000 purchase of inventory on account affect the current ratio?

Reference no: EM131522389

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