Asked by Micah Jones on May 28, 2024

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An increase in which one of the following accounts increases a firm's current ratio without affecting its quick ratio?

A) Accounts payable
B) Cash
C) Inventory
D) Accounts receivable
E) Fixed assets

Current Ratio

An indicator of a business's capability to settle obligations due within a year, measuring its immediate financial solvency.

Quick Ratio

A measure of a company's ability to meet its short-term obligations with its most liquid assets, calculated by subtracting inventories from current assets, then dividing by current liabilities.

Accounts Receivable

Amounts owed to a company by customers for goods or services delivered on credit.

  • Acquire knowledge about various financial ratios and their impact on financial leverage and liquidity.
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Nicole, Deaf_Life_Jun 02, 2024
Final Answer :
C
Explanation :
The current ratio is calculated as current assets divided by current liabilities. Increasing inventory (a current asset) raises the current ratio without affecting the quick ratio, as the quick ratio excludes inventory from its calculation.