The Cavendish Company recently issued new common stock and used the proceeds to pay off some of its short-term notes payable. This action had no effect on the company's total assets or operating income. Which of the following effects would occur as a result of this action?
A. The company's debt ratio increased.
B. The company's current ratio increased.
C. The company's times interest earned ratio decreased.
D. The company's basic earning power ratio increased.
E. The company's equity multiplier increased.
Answer: B
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