What will be the effect on the current ratio, if debentures are issued against the purchase of fixed assets?
Answer & explanation
Correct answer: option 3
The correct answer is option 3- Not alter.
Current ratio = Current assets/Current liabilities.
Debentures are non-current liabilities and fixed assets are non-current assets. So, there will be no increase or decrease in the current ratio parameter. So the current ratio will remain the same means not alter.