Multiple Choice Question What is the impact of repayment of a short-term bank loan just before the balance sheet date? O Working capital would change, but the current ratio would not change. O Working capital would not change, but the current ratio would change. O Both working capital and the current ratio would change. O Neither working capital nor the current ratio would change
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Step 1: Working capital is calculated as Current Assets - Current Liabilities. Show more…
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Assuming a current ratio of 1.0 and an acid test ratio of 0.75, how will the borrowing of cash to be paid back in five years affect each ratio? a) Increase the current ratio and increase the acid test ratio b) No change to the current ratio and decrease the acid test ratio c) Decrease the current ratio and decrease the acid test ratio d) Increase the current ratio and decrease the acid test ratio
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