Question: Instruction: Most decision made by management impact the ratio analysts use to evaluate performance. Indicate whether each of the scenarios will immediately increase, decrease, or

Instruction: Most decision made by management impact the ratio analysts use to evaluate performance. Indicate whether each of the scenarios will immediately increase, decrease, or have no effect on the ratios shown. Assume each ratio is less than 1.0 before the action is taken.

Given scenario: decision to refinance on a long-term basis some currently maturing debt.

I know that the answers are: increase current ratio, increase quick ratio, and no effect to debt-to-equity ratio. However, I do not understand why that would be the answer. Can someone help explain why it would increase the liquidity ratios but have no effect on the financing ratio?

Thanks in advance.

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