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Finman 2 Answers
Finman 2 Answers
16. Van Buren Company has a current ratio = 1.9. Which of the following actions
will increase the company’s current ratio?
a. Issue short-term debt and use the proceeds to buy back long-term debt
with a maturity of more than one year.
b. Reduce the company’s days sales outstanding to the industry average and
use the resulting cash savings to purchase plant and equipment. c. Use cash
to purchase additional inventory.
d. Statements a and b are correct.
e. None of the statements above is correct.
Current Debt
ratio TIE ratio
a. 0.5 0.5 0.33
b. 1.0 1.0 0.50
c. 1.5 1.5 0.50
d. 2.0 1.0 0.67
e. 2.5 0.5 0.71