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Question 1: If a firm increases its cash balance by issuing additional shares of common stock, working
capital:
A. Remains unchanged and the current ratio remains unchanged.
B. Increases and the current ratio remains unchanged.
C. Increases and the current ratio decreases.
D. Increases and the current ratio increases.
Correct Answer: D
Explanation:
Choice "d" is correct. If a firm increases its cash balance by issuing additional shares of common
stock,
working capital increases and the current ratio increases.
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10 days ago

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