An increase in the current asset to total asset ratio has the effects of ________ on profits and ________ on risk.
A) an increase; an increase
B) an increase; a decrease
C) a decrease; a decrease
D) a decrease; an increase

Question

Quizplus · Accepted Answer

An increase in the current asset to total asset ratio typically means more assets are tied up in less productive, lower-return assets, which can decrease profits. However, it also means the company is more liquid and less risky, leading to a decrease in risk.

An Increase in the Current Asset to Total Asset Ratio