What does paying invoice of supplier has?

A- no Affect on current Ratio B - Postive Affect on Current ratio C- Negative affect on current ratio D- not related to current ratio

Question added by Ahmed kandil , Cost Controller , Battour Holding Cpompany
Date Posted: 2017/01/07

Upvote (0) Views (8) Followers (2) Answers (2) Report Question

by Mohammed Omar Khan , Chief Accountant , El Alfy Co. for Marble & Granite Contracting LLC

Surely, positive affect on current ratio .

Eg:- Current Assets - 100,000/-, Current Liabilities - 75,000/- Ratio - 1.33

If you pay any supplier, current liabilities will decrease - In this Eg:- Pay 25,000/- to supplier

Current Ratio - 100,000 / 50,000 = 2 - better than the previous ratio.

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