Asked by Andrés Tomas on May 31, 2024
Verified
Norton Incorporated could improve its current ratio of 2 by:
A) paying a previously declared stock dividend.
B) writing off an uncollectible receivable.
C) selling merchandise on credit at a profit.
D) purchasing inventory on credit.
Current Ratio
A liquidity ratio that measures a company's ability to pay short-term and long-term obligations, calculated as current assets divided by current liabilities.
Stock Dividend
A distribution of a corporation's earnings to its shareholders in the form of additional shares rather than cash.
Uncollectible Receivable
A receivable that is deemed irrecoverable and is written off as a loss because the debtor is unable to fulfill their obligation.
- Appraise the repercussions of transactions on liquidity indexes, specifically the current ratio and the acid-test (quick) ratio.
Verified Answer
Learning Objectives
- Appraise the repercussions of transactions on liquidity indexes, specifically the current ratio and the acid-test (quick) ratio.
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