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1 year ago

What will happen to the current ratio if current assets increase, while everything else remains unchanged?

Business

1 answer:

Nana76 [90]1 year ago

5 0

The current ratio will increase if current assets increase, while everything else remains unchanged.

This is further explained below.

<h3>What is the current ratio?</h3>

Generally, A liquidity ratio that evaluates a company's capacity to pay short-term debts or those that are due within the next year is called the current ratio.

It explains to investors and analysts how a business may get the most out of the current assets that are shown on its balance sheet in order to pay off its current debt and any other payables.

A current asset is defined as any asset that a company can reasonably expect to sell, consume, or deplete through the normal operations of the business inside the current financial year or an operating cycle, or an economic year.

In other words, a current asset is an asset that will be sold, consumed, or exhausted.

In conclusion, If current assets continue to grow while everything else stays the same, the current ratio will continue to show an upward trend.

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3 years ago

According to the simple monetary model, if money is growing at 5% in the United States and 6% in the United Kingdom, while real

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Since the money supply is growing at a much faster rate than real GDP in the US, this means that the inflation rate in the US will be higher than the inflation rate in the UK. In both countries the money supply is growing at a faster rate, but the difference in the US is larger (money supply is growing 67% faster that real GDP), while the money supply in the UK is growing 20% faster than real GDP.

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