Question: P Corporation's current ratio is 0 . 5 , while Q Company's current ratio is 1 . 5 . Both firms want to show their
P Corporation's current ratio is while Q Company's current ratio is Both firms want to show their coming endofyear financial statements. As part of the strategy to show a favorable financial position, each firm will double its current liabilities by adding shortterm debt and placing the funds obtained in the cash account. Which of the statements below best describes the actual results of these transactions?
A
The transactions will have no effect on the current ratios.
B
The current ratios of both firms will be increased.
C
The current ratios of both firms will be decreased.
D
Only P Corporation's current ratio will be increased.
E
Only Q Company's current ratio will be increased.
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