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23-05-2023
Business

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Company Pogba has a current ratio of 2.5 and a quick ratio of 1.0 along with an overdraft. If it purchases inventory for cash what is the impact on these ratios?
Current ratio = Current assets / current liabilities
Quick ratio (or acid test) = (Current assets – inventory) / current liabilities
A Current Ratio: decrease Quick Ratio: decrease
B Current Ratio: increase Quick Ratio: increase
C Current Ratio: increase Quick Ratio: decrease
D Current Ratio: decrease Quick Ratio: increase

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