If a firm uses part of the cash it received from payment of an account receivable to buy inventory and leaves the rest in its bank account, its current ratio will remain unchanged.

Name: If a firm uses part of the cash it received from payment of an account receivable to buy inventory and leaves the rest in its bank account, its current ratio will remain unchanged.
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Question

Quizplus · Accepted Answer

The current ratio remains unchanged because both cash and inventory are current assets, so the total current assets do not change.

If a Firm Uses Part of the Cash It Received