Question $2$

$2$ pt

One common problem with the current ratio is that it is susceptible to "window dressing." If prior to the end of the accounting period Saxon Company has a current ratio of $1\mathrm{.}5$ and management wishes to boost its current ratio it may decide to

pay off accounts payable prior to year end.

purchase short$-$term investments with cash.

purchase more inventory with cash.

purchase more inventory on account.