As of December 31, Year 1, Gant Corporation had a current ratio of 1.29, quick ratio of 1.05, and working capital of $18,000. The company uses a perpetual inventory system and sells merchandise for more than it cost. On January 1, Year 2 Gant paid $3,600 on accounts payable. Which of the following statements is incorrect?
A. Gant's working capital will remain the same.
B. Gant's quick ratio will increase.
C. Gant's quick ratio will increase and its current ratio will decrease.
D. Gant's current ratio will increase.
Answer: C
Business
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