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Purchase of inventory affect the current ratio

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Reference no: EM132204081

Dungy Training Company has a current ratio of 0.90 to 1, based on current assets of $7.38 million and current liabilities of $8.20 million.

1. How, if at all, will a $870,000 cash purchase of inventory affect the current ratio?

2. How, if at all, will a $870,000 purchase of inventory on account affect the current ratio?

Reference no: EM132204081

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