Discuss the impact of cash payment against the accounts payable on the current ratio of a company. In addition, you will perform a vertical analysis against the entries listed on the financial statement.

A company has a current ratio of two. The CFO decides to pay off a portion of its accounts payable with cash. Explain whether the current ratio will increase, decrease, or remain unchanged. Support your answer with appropriate rationale.

Based on the attached financial information, perform a vertical analysis, list the steps performed, and provide an explanation for your analysis. year-2010 year-2009 amount in dollars amount in dollars sales 1,00,000 79,900 cost of goods sold 47,500 39,950 operating expenses 750 500 selling expenses 9,500 9,000 administrative expenses 12,000 12,000 net income 30,250 18,450

Answer rating: 100% (QA)

Paying down accounts payable will increase the current ratiobecausecurrent assetsand current liabili... View the full answer