Examine what happens to the current ratio when:

Scenario		Effect on current ratio
1.	the business performed services to clients that paid in advance 2 months ago	AnswerIncreaseNo effectDecreaseIt depends
2.	owners withdraw cash from the business	AnswerNo effectIt dependsDecreaseIncrease
3.	money is received from a debtor	AnswerIt dependsDecreaseIncreaseNo effect
4.	equipment is purchased on credit, with the amount due to be paid in 3 years time	AnswerIncreaseDecreaseIt dependsNo effect
5.	inventory is sold for cash for an amount lower than its cost	AnswerDecreaseIt dependsIncreaseNo effect
6.	a customer owing money to the business goes bankrupt	AnswerIncreaseIt dependsDecreaseNo effect
7.	inventory is purchased on credit	AnswerIncreaseNo effectsIt dependsDecrease
8.	inventory on hand has a lower net realisable value than its historical cost	AnswerNo effectIncreaseIt dependsDecrease
9.	the business provides services to clients on credit	AnswerDecreaseIt dependsNo effectIncrease
10.	inventory is sold for cash for an amount greater than its cost	AnswerIncreaseIt dependsDecreaseNo effect