A company has current assets of $1.8m, including inventory of $0.5m, and current liabilities of $1.0m.
What would be the effect on the value of the current and acid test ratios if the company bought more raw material inventory on three months’ credit?
| Current ratio | Acid test | |||
|---|---|---|---|---|
| A | Increase | Increase | ||
| B | Decrease | Increase | ||
| C | Increase | Decrease | ||
| D | Decrease | Decrease |
