Question: 1. Determine whether each of the following changes in risk ratios is good news or bad news about a company.
a. Increase in receivables turnover.
b. Decrease in inventory turnover.
c. Increase in the current ratio.
d. Increase in the debt to equity ratio.
2. Pro Leather, a supplier to sporting goods manufacturers, has a current ratio of 0.90, based on current assets of $450,000 and current liabilities of $500,000. How, if at all, will a $100,000 purchase of inventory on account affect the current ratio?