A company's Current Ratio is 2 : 1. After cash payment to some of its creditors, Current Ratio will:

Increase

A company's Current Ratio is 2 : 1. After cash payment to some of its creditors, Current Ratio will increase.
For example - Current assets is of ₹200000 and current liabilities is ₹100000 as current ratio is 2:1.
After cash payment to some of its creditors make the cash and creditors to decrease by same amount which means current assets so lets assume creditors are of ₹50000 which are paid so current assets and current liabilities are decreased by ₹50000.
New current asset = 200000 - 50000 = 150000
New current liability = 100000- 50000 = 50000
Current ratio = CA/CL
                     = 150000/50000
                     =3:1
Current ratio increased to 3:1 from 2:1