Fullerton Co. has the following information from its accounting records: Current assets$80,000 Total assets 200,000 Current liabilities 40,000 Total liabilities 120,000 If Fullerton uses cash of $10,000 to pay a current liability, its:
A. current ratio decreases and its debt-to-assets ratio decreases.
B. current ratio increases and its debt-to-assets ratio decreases.
C. current ratio increases and its debt-to-assets ratio increases.
D. current ratio decreases and its debt-to-assets ratio increases.
Answer: B
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