M11-3 Computing and Interpreting the Current Ratio The balance sheet for Shaver Corporation reported the following: total assets, $250,000; noncurrent assets, $150,000; current liabilities, $40,000; total owners’ equity, $90,000; net income, $3,320; interest expense, $4,400; and income before income taxes, $5,280. Compute Shaver’s current ratio. Based on this ratio alone, does it appear Shaver will be able to meet its obligations to pay current liabilities as they become due? M11-4 Analyzing the Impact of Transactions on the Current Ratio BSO, Inc., has a current ratio of 2.0 ( = $1,000,000 ÷ $500,000). For each of the following transactions, determine whether the current ratio will increase, decrease, or remain the same. (

a) Purchased $20,000 of new inventory on credit. (

b) Paid accounts payable in the amount of $50,000. (

c) Recorded accrued salaries in the amount of $100,000. (

d) Borrowed $250,000 from a local bank to be repaid in 90 days.