Collect some of the current accounts receivable

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General hospital has a current ratio of 0.5. Which of the following actions would improve (increase) this ratio? (Hint: Create a simple balance sheet that has a current ratio of 0.5. Then, judge how the transactions below would affect the balance sheet. )

1. Use cash to pay off current liabilities

2. Collect some of the current accounts receivable

3. Use cash to pay off some long term debt.

4 . Purchase additional inventory on credit (i.e., accounts payable).

5. Sell some of the existing inventory at cost (book value).

b. Now assume that General Hospital has a current ratio of 1.2.In this situation which of the above actions would improve this ratio?

Reference no: EM131343698

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