Fill in the blank sections about if the ratio increases, decreases, or has no change. Thank you.

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a. Modern Medical Devices have a current ratio of 0.5. Which of the following actions would improve (i.e., increase) this ratio?

-Use cash to pay off current liabilities.

-Collect some of the current accounts receivable.

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

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

-Sell some of the existing inventory at cost.

b. Assume that the company has a current ratio of 1.2. Now, which of the above actions would improve this ratio?

Problem 17.1
a. Start with current ratio =0.5
Current assets	$5.00
Current liabilities	$10.00
Current ratio	0.50
Cash used to pay current liability
Current assets	$4.00
Current liabilities	$9.00
Current ratio	0.44
Does the ratio increase, decrease, or no change?	Decreases
Collection of A/R
Current assets	$5.00
Current liabilities	$10.00
Current ratio	0.50
Does the ratio increase, decrease, or no change?
Cash used to pay LT liability
Current assets	$4.00
Current liabilities	$10.00
Current ratio	0.40
Does the ratio increase, decrease, or no change?
Inventory purchased on credit
Current assets	$6.00
Current liabilities	$11.00
Current ratio	0.55
Does the ratio increase, decrease, or no change?
Inventory sold at cost
Current assets	$5.00
Current liabilities	$10.00
Current ratio	0.50
Does the ratio increase, decrease, or no change?
b. Start with current ratio =1.2
Current assets	$12.00
Current liabilities	$10.00
Current ratio	1.20
Cash used to pay current liability
Current assets	$11.00
Current liabilities	$9.00
Current ratio	1.22
Does the ratio increase, decrease, or no change?
Collection of A/R
Current assets	$12.00
Current liabilities	$10.00
Current ratio	1.20
Does the ratio increase, decrease, or no change?
Cash used to pay LT liability
Current assets	$11.00
Current liabilities	$10.00
Current ratio	1.10
Does the ratio increase, decrease, or no change?
Inventory purchased on credit
Current assets	$13.00
Current liabilities	$11.00
Current ratio	1.18
Does the ratio increase, decrease, or no change?
Inventory sold at cost
Current assets	$12.00
Current liabilities	$10.00
Current ratio	1.20
Does the ratio increase, decrease, or no change?