Based onTransic\'s current ratio, which of the following statements is true rega

Question

Based onTransic's current ratio, which of the following statements is true regarding the company?

a. Transic's current ratio has increased, indicating that the company is in a more favorable position to obtain short-term credit than in 2015. b. Transic's current ratio has decreased, indicating that the company is in a less favorable position to obtain short-term credit than in 2015. c. Transic's current ratio has increased, indicating that the company is in a less favorable position to obtain short-term credit than in 2015. d. Transic's current ratio has decreased, indicating that the company is in a more favorable position to obtain short-term credit than in 2015. 2016 2015 ASSETS Current Assets: Cash Marketable Securities Accounts Receivable Other Current Assets $48,000 $14,000 9,000 13,000 35,000 24,000 15,000 18,000 107,000 69.000 140,000 130.000 $247,000 $199,000 Total Curent Assets Fixed Assets (net) Total Assets LIABILITIES 72,000 $52,000 50,000 37,000 $122,000 $89,000 Current Liabilities Long-term Liabilities Total Liabilities Total Stockholders' Equity Total Liabilities And Stockholders' Equity $125,000 $110,000 $247.000 $199,000

Explanation / Answer

Details Year 2016 Year 2015 Current Ratio=Current Asset/Current Laibilities=                          1.49                     1.33 As the current ratio has increased , Transic can absorb more current laibilities and pay with the current assets . So Transic is in a more favorable position to   obtain short term credit. So option A is correct.

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