Practicing Success
What will be the effect on the current ratio, if debentures are issued against the purchase of fixed assets? |
Improve Reduce Not alter None of these |
Not alter |
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. |