Question Details

What effect did the borrowing transaction have on Tyner Company's current ratio



1. Which one of the following ratios would not likely be used by a short-term creditor in
evaluating whether to sell on credit to a company?
a. Current ratio
b. Acid-test ratio
c. Asset turnover
d. Receivables turnover
2. Ratios are used as tools in financial analysis
a. instead of horizontal and vertical analyses.
b. because they can provide information that may not be apparent from inspection of the
individual components of a particular ratio.
c. because even single ratios by themselves are quite meaningful.
d. because they are prescribed by GAAP.
3. The ratios that are used to determine a company's short-term debt paying ability are
a. asset turnover, times interest earned, current ratio, and receivables turnover.
b. times interest earned, inventory turnover, current ratio, and receivables turnover.
c. times interest earned, acid-test ratio, current ratio, and inventory turnover.
d. current ratio, acid-test ratio, receivables turnover, and inventory turnover.
4. Tyner Company had $250,000 of current assets and $90,000 of current liabilities before
borrowing $60,000 from the bank with a 3-month note payable. What effect did the borrowing transaction have on Tyner Company's current ratio?
a. The ratio remained unchanged.
b. The change in the current ratio cannot be determined.
c. The ratio decreased.
d. The ratio increased.
5. A liquidity ratio measures the
a. income or operating success of an enterprise over a period of time.
b. ability of the enterprise to survive over a long period of time.
c. short-term ability of the enterprise to pay its maturing obligations and to meet
unexpected needs for cash.
d. number of times interest is earned.



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