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Question : The Current Ratio of a company is 2:1. State, that the following transaction would improve, reduce or alter the current ratio.

Issue of new shares against the purchase of fixed assets.

Option 1:

Improve

Option 2:

Reduce

Option 3:

Alter

Option 4: Not alter


Team Careers360 14th Jan, 2024
Answer (1)
Team Careers360 17th Jan, 2024

Correct Answer: Not alter


Solution :

Neither current assets nor current liabilities are affected because non-current and Non-current liabilities are increased by the same amount.
Hence, the correct ratio is option 4.

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