A Company Has the Following Current Assets and Current Liabilities

Multiple Choice

A company has the following current assets and current liabilities (all figures in '000s) : $$\begin{array} { l r } \text { Cash and accounts receivable } & \$ 1,000 \\\text { Inventory and prepaid expenses } & 1,000 \\\text { Current liabilities } & 1,500\end{array}$$ The company is concerned about not looking liquid enough and is considering borrowing $500,000 from the bank to buy short-term highly liquid investments.What would be the effect on their current ratio and quick ratio? $\begin{array}{ll}&\text { Current } & \text { Quick } \\&\text { Ratio } & \text { Ratio }\\A.&\text { Increase } & \text { Increase } \\B.&\text { Increase } & \text { Decrease } \\C.&\text { Decrease } & \text { Increase } \\D.&\text { Decrease } & \text { Decrease }\end{array}$

A) Option A
B) Option B
C) Option C
D) Option D