The current ratio measures the degree to which current assets cover current liabilities. A high ratio indicates a good probability that the company can retire current debt. When long term debt exceeds stockholder's equity, the current ratio will fall.
What effect will reclassifying a long term investment into cash within one year have on the current ratio?
Is a firm's true financial position stronger as a result of reclassifying investments?
What are the ethical ramifications of re-classifying investments?
Give an example of when reclassifying a long term investment as a short term investment makes financial sense for the company