At year-end 2010,General Tech reported a quick ratio of 2.75 and at year-end 2009 it was 3.10.Which of the following is a potential cause of the decrease in this ratio?
A)An increase in accounts payable and a decrease in inventories.
B)A decrease in inventories and an increase in long-term notes payable.
C)A decrease in short-term borrowings and an increase in cash.
D)An increase in accounts payable and a decrease in cash.

Question

Quizplus · Accepted Answer

The decrease in the numerator (cash) and the increase in the denominator (accounts payable), each would cause the quick ratio to decrease.

At Year-End 2010,General Tech Reported a Quick Ratio of 2