# Current ratio, quick ratio, DE problem

If my current ratio is 2 and my quick ratio is 1, what happens if I pay with cash my short term payables; what happens with my current ratio, quick ratio and D/E ?

I know (or hardly assume) that they both increase and the D/E decreases…. but I dont know why? Please help!

~ The best is yet come ~

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If you pay what, exactly, with cash?

Simplify the complicated side; don't complify the simplicated side.

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SORRY…. I was very distracted… my short term payables

~ The best is yet come ~

Try making up your own numbers for a balance sheet, then see what happens.

Make them simple:

• Cash: 10
• A/R: 30
• A/P: 5
• and so on

Believe me: you’ll benefit a lot more by doing this yourself than by reading an answer here.

Simplify the complicated side; don't complify the simplicated side.

Financial Exam Help 123: The place to get help for the CFA® exams
http://financialexamhelp123.com/

S2000magician wrote:

Try making up your own numbers for a balance sheet, then see what happens.

Make them simple:

• Cash: 10
• A/R: 30
• A/P: 5
• and so on

Believe me: you’ll benefit a lot more by doing this yourself than by reading an answer here.

This is the best way to do it. Whenever you’re struggling to understand something, just write it out. Because you figure it out on your own, you’ll understand it better.

Thank you to both of you…. i think you are absolutely right..

~ The best is yet come ~