If a company has an acid-test ratio of 1.2:1, what respective effects will the borrowing of cash by short-term debt and collection of accounts receivable have on the ratio? $$\begin{array} { l c c }
& \text { Short-term Borrowing } & \text { Collection of Receivable } \
\text { a. } & \text { Increase } & \text { No effect } \
\text { b. } & \text { Increase } & \text { Increase } \
\text { c. } & \text { Decrease } & \text { No effect } \
\text { d. } & \text { Decrease } & \text { Decrease }
\end{array}$$

Question

If a company has an acid-test ratio of 1.2:1, what respective effects will the borrowing of cash by short-term debt and collection of accounts receivable have on the ratio? $$\begin{array} { l c c } 
& \text { Short-term Borrowing } & \text { Collection of Receivable } \
\text { a. } & \text { Increase } & \text { No effect } \
\text { b. } & \text { Increase } & \text { Increase } \
\text { c. } & \text { Decrease } & \text { No effect } \
\text { d. } & \text { Decrease } & \text { Decrease }
\end{array}$$

Quizplus · Accepted Answer

The Answer of If a company has an acid-test ratio of 1.2:1, what respective effects will the borrowing of cash by short-term debt and collection of accounts receivable have on the ratio? $$\begin{array} { l c c } 
& \text { Short-term Borrowing } & \text { Collection of Receivable } \
\text { a. } & \text { Increase } & \text { No effect } \
\text { b. } & \text { Increase } & \text { Increase } \
\text { c. } & \text { Decrease } & \text { No effect } \
\text { d. } & \text { Decrease } & \text { Decrease }
\end{array}$$

If a Company Has an Acid-Test Ratio of 1