MANAGEMENT

Detailed explanation-1: -Changes in the value of current assets and current liabilities leading to a decrease in the former and an increase in the latter will definitely change the current ratio. So, this option is incorrect. The scope of current ratio is limited to current assets and current liabilities only.

Detailed explanation-2: -Since there is no effect on current liabilities and an increase in current assets, there would be an increase in the current ratio.

Detailed explanation-3: -Repaying or restructuring debt will raise the current ratio. Explore whether you can reamortize existing term loans and change how the lender charges you interest, effectively delaying debt payments so they drop off your current ratio. Negotiate longer payment cycles whenever possible.

Detailed explanation-4: -If a transaction increases current assets and current liabilities by the same amount, there would be no change in working capital. For example, if a company received cash from short-term debt to be paid in 60 days, there would be an increase in the cash flow statement.

Detailed explanation-5: -In theory, the higher the current ratio, the more capable a company is of paying its obligations because it has a larger proportion of short-term asset value relative to the value of its short-term liabilities.