Daley, Inc. is consistently profitable. Its financial relationships as of January 1, 20X1 were:
Daley, Inc. is consistently profitable. Its financial relationships as of January 1, 20X1 were:
Current ratio
2 to 1
Long term debt divided by Total Assets
0.5
On February 1, 20X1, Daley issued $100,000 of long-term debt for cash. What is the effect on these ratios?
Long-term debt divided by Total assets increases; current ratio decreases
Long-term debt divided byTotal assets increases; current ratio increases
Long-term debt divided by Total assets decreases; current ratio decreases
Long-term debt divided by Total assets decreases; current ratio increases
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