Y Co had a current ratio of 4.44 in 2011 and 5.84 in 2012.Which of the following would not cause the ratio to increase?
A)An increase in cash and equivalents and short-term investments.
B)An increase in current assets that exceeded the increase in current liabilities.
C)Current assets as a percentage of total assets increased while current liabilities as a percentage of total liabilities and shareholders' equity decreased.
D)An increase in long-term liabilities.

Question

Quizplus · Accepted Answer

An increase in long-term liabilities would not affect the current ratio, as it only takes into account current assets and liabilities. Therefore, it would not cause the ratio to increase.

Y Co Had a Current Ratio of 4